In the latest of our ‘Ask the Expert’ series, we talk to Mark Nuttall, Country Manager for Hill & Associates in Singapore, about his experiences of combatting complex crime and the ongoing international battle to stay one step ahead of money launderers.
You’ve had an exciting and varied career spanning multiple areas of enforcement and investigation into money laundering, corruption, and environmental crime. Can you give us some of the highlights?
For part of my career I was a law enforcement officer (Detective) at New Scotland Yard in London, dealing with a range of traditional serious and organised crime networks involved in drugs, firearms, and violent crimes.
Serious and organised crime requires the services of expert money launders, fraudsters and that big cobweb of duplicitousness that takes place with professional enablers. As a result, I led operations and projects to deal with the bigger picture, which was often international in nature.
On concluding my work at New Scotland Yard, I moved into risk consultancy, which took me around the world dealing with foreign governments, financial institutions and corporate entities.
I then took an executive staff position at Interpol, a membership organisation that assists in the collaboration of law enforcement entities, their respective requests and any intelligence sharing dissemination, rather than a law enforcement agency in its own right.
I worked alongside the United Nations and various other international and private organisations to collaborate on these aims and objectives, engaging on missions within the Solomon Islands, Indonesia, Myanmar, and China, to name just a few.
I’ve witnessed many interesting sights and sounds in places that seem like paradise to tourists, but I got to see a very different side.
Do you see parallels between money laundering and the many other areas of criminal activity you have encountered during your career?
A crime is a breach of a nation’s (or a state within a nation’s) criminal legislation, with the whole range of caveats and processes which the legislation of that country caters. A crime in one country is not necessarily a crime in its bordering nation – or in some instances even within its own national borders between states. With that in mind, money laundering in one nation can be a different beast than that in its neighbour.
The Financial Action Task Force (FATF) and the international community have for many years been working at disseminating standards and consistent definitions; however, on reading a number of national money laundering legal acts, this is still not a simple ask.
Although legislative acts and criminal law might not be consistent, the criminal recidivist still works in a broadly similar fashion from country to country, and state to state. Money laundering is no exception, albeit for some slight cultural twists.
Serious and organised crime networks rely on professional enablers, who generally share similar methodologies, or are specialists within their own territory and domain. Criminals need estate agents, solicitors, accountants, lawyers, perhaps a judge, police, customs agents, notaries, bankers, tellers, IT experts, formation agents and the litany of other professional trades.
Crime, like most legal business, relies on facilitation processes completed by others, like setting up a shell company, opening a bank account, organising visas, stamping a document, forging a certification or using a money transfer service of some kind. Without professional enablers who do the work, it would be difficult to orchestrate money laundering (and crime of an organised nature) on an efficient scale and without lines of loss.
How effective are sanctions and deterrence regimes in combatting financial and environmental crime?
Sanctions are only effective if they are reviewed regularly, as part of an organization’s screening program, and enforced properly – rather than in a siloed approach. Any sanctions regime makes it harder and raises the cost for the bad actors, but they are always on the lookout for the weakest link in any system.
Someone who appears on a sanctions list will often be a tertiary player – they might be flagged sometimes, but a lot of organisations don’t ever really get past the secondary investigation stage, particularly when it comes to money laundering, and some stick at the primary investigation stage. In terms of the major organised crime circuit, you’re never more than two or three steps away from a PEP, or a person of an organisation that is on a sanctions list.
When we look at various countries that are under sanctions, or that are on the FATF grey list, can we say that they are genuinely stopping criminal activity? No, I don’t think we can. When you look at the statistics, crime rates don’t come down when sanctions are activated. The wheels keep on turning. The transportation containers and commodities keep on moving and the money keeps circulating.
The regulated sector has an inconsistent sanctions compliance record. Many companies do not even have a formal program in this area and there are issues with the extent to which client screening takes place, as well as the degree of employee training and know-your-employee screening, alongside internal due diligence and auditing.
In terms of criminality arising from natural resource extraction, transportation and commodity refinement, this is an area of vast wealth and geopolitical relations. If dealt with correctly with review, analysis and governance, bad business practices which could potentially turn into criminal behaviours can be identified, rectified and remediated.
The ‘Environmental, Social and corporate Governance (ESG)’ space isn’t just centred around financial bonds or trades, which incidentally is a trillion USD industry. It is interwoven into everyday business analytics, and ‘enterprise risk management’, it is the bedrock that ‘SWOT’ analysis is steeped within, and it is about profitability and ‘risk versus reward’ decision-making processes. We might not realise we are taking ESG factors into consideration in our day to day business, however they are an integral part of basic business management.
What are some best practices for organizations?
- As the difficulties in the area grow, and the price of failure mounts, firms should look into :The growing importance of sanctions rules, which highlight an urgent need to create an appropriate culture of compliance. Corporate leaders should emphasize this issue, especially with employees who may previously have felt that the rules did not apply to them.
- Allocating resources necessary to implement and maintain a sanctions compliance program that meets regulatory expectations or outsourcing that obligation to external professionals who have a less biased lens to audit and analyse through.
- Design well-thought-out and explainable systems that minimize their exposure; to document why they took the decisions they did; to monitor their implementation; to run them rigorously; and to review the changing risks regularly. Turning to ‘the standard’ – a unified, globally and regionally aware, risk-based approach to sanctions compliance. As per FATF guidance on all issues, there is no ‘one-size-fits-all’ solution, however from my perspective a general framework based on an ‘enterprise risk management’ model would greatly assist.
- Consider working with sanctions and risk specialists and consultants in order to reach a required standard, rather than simply relying on internal off-the-shelf solutions. External specialists and consultants have the experience, qualification, and often a wider unbiased perspective on these matters. They can also assist in identifying the ‘unknown unknowns’, as perspective carries weight and opportunity.
In part two of our Q&A with Mark Nuttall, we ask him what the COVID-19 pandemic means for international sanctions and how can financial institutions get better at detecting and managing risks.
About Mark Nuttall, Singapore Country Manager at Hill & Associates
Mark Nuttall has over 20 years of international experience as a risk management and security specialist, with a background in security, law enforcement, geopolitics, international organisations, project management and bespoke risk consultancy. He is a former senior detective at New Scotland Yard and was contracted to the Organised and Emerging Crime Directorate within Interpol. He currently works for Hill & Associates, where he oversees the firm’s operations in Singapore.