Irish Mortgage Brokers Blog

What if there is a way that we could

1. Create Jobs?
2. Do it without seeking Government grants or subsidies?
3. Give people a chance to have a local say in their local future?
4. Allow people to invest and make tax free gains in the future?
5. Create funding for businesses that doesn’t rely upon banks? Thereby removing our reliance upon  them   for SME’s?
6. Develop businesses that are not indebted from the outset but instead, which have ‘equity partners’ on an even keel with the entrepreneur?
7. Turn Ireland into a genuine ‘Silicon Valley’ of Europe when it comes to start ups? And that would release millions in start up funding without an up front cost to the state?

One way to do this is via Local Investment Opportunity Networks (LIONs)

They are a combination of ‘Dragons Den’ style finance, MicroFinance , Group/Crowd Sourcing, and Islamic Finance , taking different positive aspects of each.

From Dragons Den you get the vetting process, MicroFinance and Group Sourcing are the funding approach, and Sharia’a compliant finance offers the investment method - which is an equity stake rather than the creation of debt (recent finance bill specifically supporting Islamic investment – it would also open this brand of investment to the 40,000 Muslims in Ireland).

A simple outline is as follows: Every parish or otherwise formed locality in Ireland will be given a chance to start an investment club that up to 500 people can join, the commitment in joining is that they will pay €101.00 per month in after tax money into the common fund. With all but €1 going toward the fund (the €1 goes towards the platform provision mentioned later)

Then, as a group they have a pool of up to €50,000 per month to invest in local businesses, people who want to start a company in that community can then apply to the group for funding. The group will determine what projects obtain funding and in turn they take an equity stake in the project.

The LION would choose an investment committee from amongst it’s own members, as elected representatives of the group fund they would vet applications and determine which applications to the fund should be underwritten.

The LION can also decide that their community needs (for instance) a crèche and thereby tender for an operator with the LION providing the start up funding.

Effectively, it gives local people a say in their own local future and allows business to form without needing government assistance or putting concentrated risk onto the person starting the company.

Equally, it removes banks from the funding process and if an entrepreneur fails they don’t do so ending up in debt that would prevent them from trying to start a company again in the future.

Irish people are saving aggressively, having tripled our savings rate in the last three years . Much of our investment ends up overseas via the stock and fixed income markets, this is acceptable, but at least some savings could remain and be invested in the country by people who want to see a real benefit in their own locality.

If the investment is made with post tax income there is no exchequer loss in the process, at the same time, using a tax break on profits approach (as they do with ROTH IRA’s in the USA), any future capital gains could be waived, and in that respect there is a future waiver for the investment rather than a tax deferral as with other expenditures.

People need hope, communities need businesses and jobs, bank funding is farcical and looking for government funding support could not come at a worse time, instead, Irish people need to take control of their own future and this facilitates this view.

The only work that would need to be done from a government perspective is to provide an online platform that facilitates the clubs/groups and keeps them in line with SI 60 (which covers MiFID  – Markets in Financial Instruments Directive, a pan European law). The development of the platform need only cover reporting requirements, so the state need only act as a facilitator on the compliance aspects of the programme which would otherwise be too costly for single funds to run - due to requiring a full time compliance officer etc.

If we had a chance at fixing our own problems I believe we’d likely do a better job than the Government can do with a top down approach to create jobs, the unrealised potential in this country is huge, and we can turn savings into investment.

found out that the PRTB was going to increase the price it charged to a landlord to register a tenancy and decided to email them asking for a justification for it (it’s going from €70 per tenancy to €90 per tenancy). Given that a tenant also benefits from the PRTB I thought it would have made sense to have them pay whatever the increase was over the landlords existing bill but first I wanted to ask why it was happening, my email is below

From: Karl Deeter
Sent: 22 December 2010 14:30
To: Registrations
Subject: re: change in pricing

Dear Sirs,

Can you write back and let me know what additional service is being offered in return for the additional fee or is it merely a price increase because you have the ability to do so?
Sincerely,
karl
–
Karl Deeter QFA, (LIAM)dip
Operations Manager

The reply I got is below…..

——– Original Message ——–
Subject:     FW: change in pricing
Date:     Fri, 14 Jan 2011 08:29:12 +0000
From:     Registrations
To:     karl deeter

Dear Sir,

I refer to your e-mail below. This is the first increase in the registration fee since the PRTB was set-up in 2004.

The PRTB is self-financing and is dependent on registration fees for income as we no longer receive an Exchequer grant.

The PRTB receives in the region of €6 million in registration fees each year whereas the operating costs exceed €7 million and it cannot continue to operate at a loss.

The PRTB has taken a number of steps to reduce its operating costs:
·         The staff of the PRTB have had two pay cuts in the past year.
·         All major contracts have been re-tendered publicly.
·         All Adjudicators and Tribunal members are doing additional hearings for the same daily fee.

Yours Sincerely,

Robert Allen
Private Residential Tenancies Board
—————————————————-

‘Costing’ €7 million per annum has nothing to do with a landlord, that is an internal budgeting issue, but unlike a regular business where you could just decide ‘I won’t deal with them because I don’t like their price’, you can’t do that with the PRTB because apart from being mandatory, there are no substitutions.

This doesn’t resolve well with me because if we ran a business that cost more than it brought in then we’d cease operations or have to do whatever it took to bring the service in line with the costs, the PRTB doesn’t have that issue.

The real rub here is that they haven’t even bothered to look at their existence and who their two clients are versus who pays the bill. The two clients are tenants and landlords, but only the landlord has to stump up the cost - the tenant who pays nothing stands to benefit only. In fact, the landlord who doesn’t pay is crippled because in any dispute the PRTB will represent the tenant for free and won’t engage with the landlord due to their failure to pay the bill.

Let us suspend reality briefly to enter into this world of cost being an arbitrary concept. The ‘cost’ of the PRTB is €7m+ p.a. but they only take in €6m so that is a deficit of about 14%, alternatively you could say that they need about 16.66% more in order to break even (€6m+ 16.66% = €6.99m).

So why has the price increased by 28.5%? That will bring them from €6m to €7.7m - and this at a time when they have apparently cut costs, the €7m+ figure is historic and for that reason the benefit of a full years cost reduction will only come through in 2011. It just doesn’t stack up, it doesn’t make sense and the maths behind it are wrong.

This one sidedness is disappointing and only made worse by the fact that a toll has been erected on only one side of the bridge (always whichever side the landlord is on). This is how a tax is introduced then driven up - and in time I expect they will rise their price again because of their ‘costs’, if only state agencies could come and work in the real world where an inability to cut your coat according to your cloth actually means something.

In operations I have two main roles, firstly is the obvious operational aspect of any company which has to do with logistics of loan suppliers and our distribution to clients as well as looking at the general business planning to ensure we are always at the best of our abilities. The other role is regulatory, I act as a compliance officer, while that is not a legal position, it is one in which the practical aspects of law surrounding financial services are to be found, how it works in real life.

On that basis I was surprised to see that there were several articles talking about the use of tort law to prove negligence in lending, and with that, a particular reference to the Consumer Protection Code (CPC) which has since been updated. While I admire the initiative being taken by New Beginning I have some doubts which I will express here.

One issue we have had with regulation is that it actually gives an asymmetrical advantage to the financial institution, (we probably shouldn’t complain because it offers protection to the industry we work in) the compliance officer in any financial institution is trained to specifically ensure that there is an audit paper trail proving the position of the firm every step of the way, in fact, it is on the times that this paper trail is lacking (not always when proof of wrong doing occurs) that many of the Financial Services Ombudsman complaints and Regulator sanctions hinge, so any compliance officer doing their job is on top of this all day every day.  It stands to reason though, because the regulated entity is the one being supervised, not the consumer they serve.

The use of the consumer protection code is also an interesting take, given that the code was implicit in its requirements, to prove a tort of negligence under the CPC with any firm in full compliance with the CPC is to say that in some respect the CPC actually didn’t protect the consumer, the practical application of the code is very black and white. We’ll see if a principles based system can stand the test of the courts, having said that, much of the CPC is not principled, it is prescriptive and very clear in the requirements.

You would also need to provide absolute examples, if you claim that a brick layer can’t service their loan and that a financial institution should know this at the point of sale then the fact that many brick layers are still servicing their loans would prove this argument to be false.

One topic worth consideration is that of regulation general, sub prime lenders were not regulated until the end of 2007, and they didn’t fall under the auspices of the Regulator the same as other banks, rather it was via the Markets in Financial Instruments & Miscellaneous provisions Act 2007 which was lead by Statutory Instrument 60 European Communities (Markets in Financial Instruments) Regulations 2007 – this is the main reference document we use in MiFID enquiries. This was achieved by a change in the Central Bank Act 1997 and the SI 60.

The point to note is that Sub Prime lenders – who are some of the most aggressive arrears collectors, were not regulated at a time when these loans were mainly being done, and the rules brought out since on protection do apply to them but a tort of negligence would be unfair because with a mortgage the advice is only given at the start – and that means the CPC didn’t’ apply in many cases unless you seek to retrospectively apply law which is generally never done.

Intermediaries (mortgage brokers specifically) will be front and centre with sub prime loans because they were primarily distributed by brokers and not the lenders themselves. While brokers represented over 50% of boom time high street residential lending, they were over 90% of sub prime residential lending.

If the Consumer Protection Code is to be used then you can work through every section starting with chapter 1: ‘General principles’ – this may be an area to consider, but to ‘prove’ a person didn’t act fairly or with due skill/care/diligence would fall down to a paper trail, which, as mentioned is designed to protect the consumer from the outset, but which in practice also offers an iron clad protection to the advisor and their firm.

The issue isn’t that people have suffered as a result of credit issuance, the issue is to prove negligence in that lending, with SubPrime lenders who would be the obvious offenders the regulation doesn’t apply for much of their history, and with the high street any credit issued which followed the CPC was acting in full faith of the rules of the land and in adherence with best practice as outlined by the ultimate authority of the Regulator.

A cynical part of the outside observer may think that New Beginning is an example of barristers harvesting people to present test cases for which (if successful) they may earn a fee, even if that is the case, one would have to reasonably support such cynicism in the name of the greater good, if opportunity exists to create profit while undoing wrong then it can reasonably be deemed ethical. However, it is the granular detail upon which any test cases will fall and in that respect I don’t believe that this initiative will help any significant number of borrowers in financial difficulty because (as Building Society Association and NBER) research has shown that unexpected economic developments on a macro level (which filter down to the micro level) have played a predominant role in individual finances.

On an equal note, the most culpable lenders were not subject to the very code upon which any test may stand until after the bubble had already burst, and even if successful it will only apply to those loans taken out after early 2008, a year in which most of the sub prime lenders closed down.

It will be interesting to see how this develops, but we remain agnostic on the possibilities until proven otherwise because our interpretation of this angle is that it will require undoing of  well established principles and actions which were in accordance with the law of the land and enacted in good faith, proof of contravention would have to rely upon individual cases and therefore it cannot have wide ranging scope. There is also the issue of estoppel between the borrower and lender, if the borrower presented facts in a certain manner and the lender took them in good faith then who is to blame?

In recent correspondence the Financial Regulator wrote explaining that they have merged with the Central Bank, so in future, instead of ‘XYZ Ltd. t/a FirmName is regulated by the Financial Regulator’ companies will instead have to replace ‘Financial Regulator’ with ‘Central Bank of Ireland’. So the re-brand is now complete and the error of split regulation has now been undone.

With current advertisements and promotions you can continue as is but with future print runs or information the new information must apply.

Brokers will also have to provide an email address to the Central Bank for all regulation correspondence, as well as keeping a proper file of CPD (Continuous Professional Development) hours.

A register by firms of who is acting on their behalf must be available at all times and kept up to date, and MCR (Minimum Competency Requirements) must also be kept proving that experience is relevant to a present role.

Oversight of prudential supervision and compliance has now been moved to the Consumer Protection Codes Department within the Central Bank of Ireland.

One of my favourite firms is Institutional Risk Analytics who study banks and rate their risk. Chris Whalen of that firm is in the clip below, he recently wrote a book called ‘Inflated’ and I hope to review that on this site and elsewhere in the future. IRA are widely acknowledged as one of the best bank analyst houses in the USA.

There is a strange situation occurring in the Irish property market, arrears are rising rapidly, stock of repossessed homes is on the increase, and yet the number of repossessions is dropping; there is a contradiction in here somewhere.

Per quarter the number of properties being repossessed is dropping, banks are taking back fewer and fewer houses, this would normally be a sign of prosperity, people with jobs and a stable property market would mean that there would be some equity in the property as people pay down debt and are able to afford their payments, but that isn’t the case, quite the opposite, Irish households are heavily indebted and arrears are rapidly rising.

The largest number of properties being taken back is actually that of voluntary surrender (and abandonment), so there is no ‘repossession’ monster lurking in the Irish market because we have decided that we don’t want it to exist, this will come at a cost as we incrementally strip banks of their ability to enforce mortgage contracts.

The stock of property being held by banks (which was given back via voluntary surrender or repossessed) is growing, does that mean they are going to hold and hope for appreciation or that they are concerned that the resale value will be far below expectation, are they renting the properties out or letting them sit idle? We don’t know, but a growing stock of repo’s tells you the opposite of the first chart, it says that things are not going well, it also tells us that banks are not offloading these properties and that could be a cause for concern.

The shift in arrears is worrying, on average the rate of increase in arrears is c. 11% per quarter, which would (if the trend remains on an annual basis) give rise to a 50% increase in one year on the arrears profile. This means we could be looking at 40,000 households in arrears by q4 of this year and 50,000 by this time next year. And yet during the same period repossessions have decreased and the stock of repo’d homes is increasing.

Every trend line is on an upward trajectory, with the most concerning increase occurring in the 180 days or more arrears group. This is the group that have not made mortgage payments to the tune of six months. That doesn’t mean problems arose 6 months ago, rather it can occur in steps, if you pay half a mortgage payment for a year you are six months in arrears.

Where does it end? The only rational solution we can see is that banks start to move on properties, but there are barriers in the way, for a start, shareholders need to realise that allowing a larger stagnant pool of arrears to form is contrary to the health of a bank. The Regulator will also need to stop interfering in the arrears and repossession process, they have made it very difficult for a bank to take back a property, that trend should not continue any further than it has. Lastly, the banks need to make a decision of either allowing large sections of the loan book to go zombie-like or get honest with their operations and move in on clients holding assets they are not paying for.

Or we can opt to kick the can down the road and hope the problem goes away at some stage as economic recovery occurs, but at that stage these borrowers will have less equity (or greater negative equity) and more arrears, why isn’t anybody shouting that from the rooftops? Getting of a burning ship is generally seen as a good idea, even if the sea is cold.

We expected a 10% increase in mortgage arrears for the first half of this year, moving the total from 32,321 households to 35,531, however it increased 10.73% and the final figure was  36,438 [statistics for the last four quarters are below].

There is an ongoing inability for banks to deal effectively with people in arrears, both in terms of having the operational capacity or liquidity to offer debt relief in some form, and on the other side we have the Financial Regulator who is incrementally stripping away their power to enforce the mortgage via repossessions.

The arrears of the second half 2010 will go up again, there is no sign of either a slowing growth in arrears, or of a slow down in the rate of growth.

The only growth area in our economy at present seems to be in the deterioration of debt quality . . . but for the second half of the year it will not only be an ‘unemployment’ lead increase, rather it will be with the additional impact of lenders creating the problem via mortgage rate increases that have been independent of any European Central Bank moves (with an general move of c. 1.2% upwards in standard variable rates over the last 12 months).

The quarterly increase in arrears has been near or above 10% for the last three quarters, if this continues we can expect a further 20% by 2011 which would bring the total households in arrears to the region of 43,000 by year end and a likely figure of 50,000 by this time next year.

The solution for more than half of these owners would be repossession, in a functional market economy that is the end result. It is the fair termination of a contract where the borrower is unable to pay and it allows them to put distance between themselves and a financial obligation they can’t afford.

In the last 12 months 387 houses were repossessed, which is about 1% of the distressed stock, but according to the Irish Bankers Federation the rate of repossession by mainstream lenders has gone down in the last quarter to 86 properties, this is the third straight quarter of decline. How is this happening while the general mortgage situation is getting worse? Surely repossessions would go up at a time like this?

Unfortunately, the situation has turned entirely political, and the message that ‘keeping people in homes’ they cannot afford is the preferred solution, this in turn subjects them to endless calls, letters, form filling and stress in dealing with the banks on the basis that it keeps them in the home, but the statistics are showing that it isn’t changing the trend, or giving people the opportunity to get off a one way train. We have no metric of the family deterioration that occurs with financial problems, suffice to say, MABS, FLAC and other representative bodies say it is significant.

The question therefore must ask if a solution that keeps a person holding an asset they can ill afford to pay for is the humane approach, or would it be to release them from debt bondage as early as possible rather than to force them down a path that may have the same end result but with additional arrears interest and stress along the way?

We cannot be seen to encourage people to walk away from their debts, but we would be willing to say that when banks feel a deal may be turning against them in business that they will not continue to fund a project. We know of no reason for households to behave differently.

The rapid growth in mortgage interest supplement and applications for same is turning into a back-door bailout, non-performing loans extended by banks are being serviced by the taxpayer, banks are reluctant to take properties, not simply as a public service – that has never been their remit – rather it is so that the value of those properties do not need to be realised on their balance sheet. Banks assets are based on the value of the loans, not the value of the underlying collateral.

One view is that if you had a business and it didn’t look like it was working out a bank would have no issue in revoking credit lines or offering further support because in their opinion the proposal has soured. For the same reason it is fair to wonder why an individual would be asked to do precisely the same thing when the tables are turned?

A mortgage is ultimately a commercial arrangement and if it doesn’t work out the issue and duties are between the lender and borrower, not the lender, borrower and tax payer, but we are being dragged into the foray through mortgage interest supplement (taxpayer funded), through increased bank charges, through higher taxes which come about as a result of concern about our banking system/sovereign (and the arrears profile with lack of response is part of the issue), and directly by having a property market that is not adjusting in the time that it should.

When property markets reach clearing prices you have better odds of economic recovery (Kevin O’Rourke/ Barry Eichengreen and Agustin Benetrix all recently wrote on this topic), but we are not allowing this to happen, and it means that people who do buy today are paying too much because all of the properties that should be up for sale are not up for sale, it’s a modern ‘beggar thy neighbour’ scenario.

There are answers, but the cheap solution is denial, it has impacted 7bn of loans and only 500m in un-paids, compared to the likes of NAMA  it isn’t expensive, but the resulting reputational risk as a nation is pricey.

Below is a press release from the Financial Services Authority in the UK. This is how they deal with executives who cross the line, while we can praise reform in Ireland it is clear to see that we do not come anywhere near the standards set in the UK when it comes to discipline in the market, while over 90% of complaints are against banks, they have the fewest sanctions and yet this is the same banking system which nearly pushed the nation over the edge. The people in charge now are the same people that lead us here and it is shocking that we laud ‘new regulation’ when in fact we are still behind the times.

It is becoming evident that our own banks may have not been totally forthcoming in how they presented their own statements of affairs in the past, will similar sanctions therefore follow?

SA/PN/126/2010

27 July 2010

FSA bans and fines former Northern Rock finance director £320,000 for misreporting mortgage arrears figures

The Financial Services Authority has fined David Jones, former finance director (FD) of Northern Rock PLC (NR) £320,000 and prohibited him from performing any function in relation to any regulated activity [emphasis mine].

Jones’s misconduct started in mid January 2007 when he agreed, along with David Baker (former NR Deputy CEO), to allow false mortgage arrears figures to appear in explanatory text published with the 2006 annual accounts. Reporting correct figures would have either increased arrears by over 50% or possessions figures by approximately 300%.

For nearly a year, Jones was responsible for the continued misreporting of arrears and possessions figures on a monthly basis to NR’s assets & liabilities committee (ALCO) and, on a quarterly basis, to the Council of Mortgage Lenders (CML).

Margaret Cole, FSA director of enforcement and financial crime, said:

“Even though other senior directors within the firm were involved in the misreporting of arrears and possessions figures, as a senior director himself and as an FSA authorised person, Jones had a duty to reveal the true position to the public and to important internal committees. He had numerous opportunities to put things right, but failed to do so.

“This is a message to all FSA approved persons, that they must take their individual responsibilities seriously at all times, or suffer the consequences.”

Background

From 2005, NR staff were under pressure to report arrears figures at half the CML average. To achieve this, a series of improper actions were taken which were outside NR’s stated policy. For example, cases where a possession order had been made against a property, but where physical possession had not yet been taken (pending possessions cases) were excluded from all arrears and possessions figures. Although Jones was not involved in the actions that gave rise to their existence, by January 2007 1,917 such cases had been omitted.

Jones was FD (designate) between 10 January 2007 and 1 February 2007. During this time, David Baker informed him of the existence of the pending possessions and asked whether they impacted the firm’s stated provisions for bad debts. Jones assured himself that the provisions were correct and agreed not to reveal the pending possession cases.

As FD from 1 February 2007 to 22 February 2008, Jones was responsible for the debt management unit (DMU) and the credit management information unit (CMIU) at NR. Amongst other things, these units were responsible for reporting arrears.

Jones received a 20% discount for settling in Stage 2 of the FSA’s executive settlement procedures. Were it not for this discount, Jones would have been fined £400,000.

We were thinking of changing the way that brokers operate, by saying to our clients ‘our service comes at a price, we’ll advise you on any lender in the market and be totally independent, if we place your loan with one that pays commission you can set that against your fee, and if not then pay the fee’, doing so in the belief that totally transparent and independent advice is a good thing, and something that everybody wants, the broker, the consumer and the Regulator.

Sadly this is not the case, instead the Regulator (soon due another name change to ‘Central Bank Financial Services Authority of Ireland’) is relying on the letter of the law in the Consumer Credit Act of 1995 to ensure that brokers can’t give best advice. This is an example of total regulatory failure.

The actual portion of the code is S. 116.1.b which states ‘A person shall not engage in the business of being a mortgage intermediary unless— ( a ) he is the holder of an authorisation (”a mortgage intermediaries authorisation”) granted for that purpose by the Director, and ( b ) he holds an appointment in writing from each undertaking for which he is an intermediary.

The guidance given by the Regulator is that this is to be interpreted as meaning ‘you cannot advise a client on any mortgage unless you hold an agency with the bank/lender which you are advising about’. In other words, you can only offer advice based upon the agencies you hold, it seems many of have been breaking the rules by being honest with our clients and letting them know about mortgages that we cannot broker, and in the current climate that honesty is wrong and deemed to be outside of the remit of an independent broker.

So why bother forcing the industry participants to have certain qualifications, minimum standards, and undergo continuous professional development (CPD) if they are not going to be able to give the advice they are trained to give? This makes a donkey of common sense, and the CBFSAI (Central Bank Financial Services Authority Ireland)  would do well to remedy the situation sooner rather than later.

How do you explain such an anomaly? What is wrong with advising a person to go where ever the best deal is available? This is yet another example of regulatory failure, and sadly, the state are forcing advisers to be tied into the banking system by not allowing them to advise a client on any mortgage product outside of those for whom they hold an agency.

You can’t become a mortgage adviser unless you hold a letter of appointment with a bank, surely this is a mistake? How are we ever going to move financial advice away from commissions if you have to be in the commissions system to offer any advice? To do so without the full authorisation is illegal.

We can only live in hope that many of the irregularities in how regulation works in practice can be ironed out because the primary loser at this point in time is the Irish consumer, the very people for whom the Regulator was established to protect.

In the last twenty years there has been a huge increase within the financial services industry of ‘anti-money laundering’ and ‘anti-terrorism’ legislation, the trend started almost 20 years ago - the initial Irish take on the theme started with the Criminal Justice Act 1994. In the USA the rules go back further but the primary modern foundation is the Money Laundering Control Act 1986.

This week the new Criminal Justice (Money Laundering & Terrorist Financing) Bill 2010 passed in the Dail, and likely it will be signed off within days by the President and thus become Law. Then everybody in industry has three months with which to train up and become compliant. Yet another hidden and embedded cost in the financial system that will be offloaded onto customers via reduced service/turn around times as well as higher costs.

The fundamental question however, is this: Has all of this legislation and additional regulation achieved what it hoped to achieve? And to that the answer is no.

Bernie Madoff operated the worlds largest ponzi scheme while all of these rules and laws were in existence, the Al Qa’ida flew planes into buildings via an operation that was financed through the same ‘bullet proof’ system, and the perpetrators were in the USA on legal grounds with normal visas. Ireland specifically has seen drug related crime sky-rocket in the same time period.

Crime hasn’t been reduced by creating these laws, rather, during this time it has increased! And the emphasis is constantly that the law helps to prevent drug dealing, trafficking and terrorism.

I work next door (literally) to a methadone clinic, trust me, we are not winning the ‘war on drugs’ (as an aside: the prohibition actually creates the market). There are not fewer murders, there world has not become a better place by any tangible metric, nor can any government body provide statistics giving a gauge of success that AML (anti-money laundering) legislation has brought us in real terms.

It is all based upon the premise that anything that reduces crime is good irrespective of cost and therefore worthwhile, minus the litmus test of being based on reality or having measurable results.

Having asked several junkies to get out of our back-yard in work, sometimes with needles literally in their arm, I can tell you this - the illegality of drugs has no bearing on their addiction when it comes to how they live their lives, and equally, criminal gangs are not hampered by the banking system. When was the last time the cops hauled in a criminal gang and kept them interned for money laundering?

They find huge stashes of drugs being trafficked, and then there is the CAB - but don’t forget the fundamental point - in both cases the money has passed through the financial system or has existed outside of it and already, CAB can only confiscate ‘after the fact’ and not before it.

If you work in finance and facilitate a person in laundering money - even if they deliberately trick you somehow into doing it - you are held as culpable as the criminal! By that rationale we should be suing gun makers who’s firearms are used in crimes! It’s a joke, and yet we line up for it year after year.

The underlying advantage to the state - the one they won’t openly talk about - is that AML/Anti-Terrorism laws don’t actually prevent crime or terrorism, rather it ensures that the true golden goose of revenue raising (the average citizen) has no way to avoid having all of their money accountable and therefore they are not able to avoid any taxes.

The cost of money laundering and compliance across every regulated company becomes an additional cost to the end user, a cost that cannot be justified by any measurable means, nor one that has prevented violent crime, drug use, or terrorism. It is there solely to benefit the state by making sure regular citizens never have a way to keep any money hidden from the ever vigilant eye of the state.

I’d love to continue but I have some studying to do, I need to go learn all about something that has everything to do with nothing at all, and only three months to do it in!