[usrusr]

Finance lobbying power must be weaker than popularly assumed if they failed to inspire a proportionate finder's fee that would make flagging worthwhile.

Of course, if I tune my cynicism level a bit darker that line of thought breaks down again, because then I start factoring in the possibility of "premium service tiers" with fees so high that a) no client in their right mind would ever consider them unless they have very pressing reasons to be friendly with the bank and b) no reasonable finder's fee could ever hope to win the bidding.

[mrfredward]

Is the idea of a finder's fee so negative? If banks regulators and the banks came up with a plan where sniffing out money laundering was rewarded and banks made extra money helping the justice system take on financial crime...isn't that the best possible outcome?

Of course the danger of such a system is banks would be overzealous in their reporting in the hopes of getting a lucky payout. That's another pitfall that would need to be addressed with fines or incentives. My point is that it's not inherently bad when businesses are rewarded for doing the right thing.

[tabs_masterrace]

That's a bit naive I think. First it wouldn't be very effective, banks are banks, that is their expertise, just because there's a reward doesn't turn bankers into policeman that will detect and act on money laundering. Then, who shall pay for the reward. The government, the central bank? Tax reductions? How valuable is a cash reward for one of the big banks anyway.

Then on top of that politics come into play, with all these increasing trade embargoes and bi-lateral agreements, many transactions could be interpreted either as laundering or legit, depending on interests.

[elliekelly]

> First it wouldn't be very effective, banks are banks, that is their expertise, just because there's a reward doesn't turn bankers into policeman that will detect and act on money laundering.

That’s exactly how the system works though, minus the reward. The AML Officer is personally responsible for implementing policies & procedures that are “reasonably designed” to prevent and detect money laundering. Then the banks report their suspicions to the government. The government is not the first line of defense or even investigation when it comes to money laundering.

[moltar]

They’ll start growing snakes

[nostalgk]

Why would lobbyists work towards rewarding those who flag money laundering transactions when, presumably as presented by the parent comment, they make money off of these transactions? If anything, they would be lobbying against a finder's fee.

If we take the parent comment to be true, the fees levied against the institution for being caught (provided they can't worm their way out of it in the first place) are merely a slap on the wrist.

[delinka]

The idea, presumably, is that the "finder's fee" is money paid to the bank for finding money laundering, and that fee outweighs the profits from the transactions themselves.

"Fees" are not levied against an institution, "fines" are. And in that light, yes, fines are indeed too low to thwart a failure to identify the correct transactions.

[jandrese]

Lawmakers and the public would almost certainly balk at billions in "finders fees" being just given to the banks, even if the money did come from seizures of the illicit assets.

[maxxxxx]

I want a finders fee for reporting anyone who makes an illegal proposal to me. It would be a huge moral hazard to pay banks for flagging illegal activity. This should be part of normal procedure.

[nostalgk]

Ah, I see. You mean to say that the governing body concerned with money laundering would pay the financial institution. I was under the impression the finder's fee would be attributed to the employee, by the financial institution (a silly thought on my end).

Of course, it all wraps back around; the bank would need to have some sort of incentive to lobby for this, and given that they are potentially making money hand over fist not to, and given the current allegations against the governing body...

[usrusr]

> I was under the impression the finder's fee would be attributed to the employee, by the financial institution

Sorry for being too ambiguous, "it all wraps around" on my end as well.

[usrusr]

They are mandated to do flagging, but cannot be forced to be good at it. An incentive would not necessarily make them better at it, but it would still add rewards to all the cases they do find, despite all the squinting and bugs and carefully assigning the lowest performers to the task.

[nostalgk]

I'd imagine the fee would need to be at least a bit more rewarding than the current punishment is punishing.

[usrusr]

As I wrote in the second paragraph ("cynicism level a bit darker"), it would be impossible for rewards to outbid transaction fees anyways, because the latter can be inflated in plausibly deniable cooperation between launderer and bank: slap on some bogus insurance, the 24 hours on call special and that outrageously expensive package that would in theory allow to summon a clerk being flown out to your yacht. All understood, on both sides, to be specifically designed to increase transaction fees to make turning a blind eye worthwhile. Money launderers know everything about reading and writing between the lines, it's basically their job.

Banks would still just catch the small fish who shop around for the lowest rates like a regular person. In the end, sibling comments about snakes and hazards are right.