London and Kuala Lumpur 19 February 2009. (www.biznewsselect.com) The following is an extract from a presentation made by Nigel Morris-Cotterill, Head, The Anti Money Laundering Network in a workshop on financial crime held in Antigua and Barbuda from 9 - 14 February 2009 organised by IFCCT and under the auspices of the Antigua and Barbuda National Office of Drugs and Money Laundering Control Policy, opened by The Prime Minister of Antigua and Barbuda and the Minister of Finance.

The comments in this extract were written and presented before the SEC intimated its charges against Allen Stanford.

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Antigua-Barbuda specific issues:

2500 people work in financial sector. It provides more than 20% of GDP. These figures from the Prime Minister and Finance Minister yesterday.

In the financial sector worldwide, hundreds of thousands of people have lost their jobs in the last year. Moreover, in all industries, financial and otherwise, redundancies and closures are always made overseas before being made in home markets.

Joining those things up, it means this: to keep a financial sector viable, it has to prove itself in every way.

Profit is not the only motive for keeping an office open. In the world of globalised financial institutions, cross-billing means that the costs incurred by regional and head offices for managing and supervising offices are part of those profit calculations.

And due to the increasing co-operation between regulators, a breach in a host country is increasingly also being seen as an breach in the home country.

In short, if you do not comply with the standards of your company's home jurisdiction, you create a risk for the entire group.

In this time of global financial crisis, if you create a risk for your group, you become a liability.

With fines and civil payments in the US running at tens of millions of dollars per event, exposing the group to that kind of risk makes you marginal at best.

If you are lucky, you will have operations suspended and a few people kept on. At worst, you will be closed down overnight.

The reason for this is simple: you will be sacrificed in order to demonstrate to home regulators that the Group is doing everything it can to meet its regulatory obligations.

It would only take one major scandal in one company for financial institutions to decide that their own offices here are going to become subject to considerable scrutiny, and that the costs of dealing with that scrutiny will cost a substantial amount.

If the finance sector is mission-critical to the local economy, because of the extensive leveraging effect described above, just one person making an error of judgement can wreck the country's economy.

The US, the UK, even France have had their scandals but they are so large that they can ride out those storms. Even Madoff has, in real terms, barely a ripple in those markets. You can go back through the so-called rogue traders since Leeson – and they have done no significant harm to the local economy.

Or you can look at the case of Van Brink and the First International Bank of Grenada. One man, one fraud, one wrecked economy.

That, if you were in any doubt, is what was at the heart of the stern warnings that were given by both the Minister of Finance and the Prime Minister yesterday.

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Links:
Workshop organiser: http://www.faircount.com/IFCCTAntigua2009/file/1037/course.html

Nigel Morris-Cotterill: http://www.countermoneylaundering.com

Telephone: The Anti Money Laundering Network Global Response Centre:
Kuala Lumpur +6 03 2078 9152