The UBO register as an “instrument” against money laundering, counterterrorism and corruption; using sledgehammers to crack nuts!

Disclaimer: There is no intention to downplay the money laundering or terrorist financing problem, but this article is about the relationship between money laundering and a massive privacy violation of the major shareholders and entrepreneurs; the UBO register.    

What information is available?

When doing research on money laundering, you mainly come across numbers. The total amount that would have been laundered in 2019 amounts to 13 billion euros, of which 5 billion euros comes from abroad (Source: FIOD annual report). Only a limited part of the nature of money laundering can be attributed to natural persons, research shows that money laundering in the Netherlands mainly occurs among drug criminals.

Counterterrorism is an emotionally charged topic and is often discussed in the news. What is not mentioned is that (fortunately) since 2014 the number of terrorist attacks has decreased by 50% and the number of civilian casualties by 54% View the overview of terrorism in 2019 here.

UBO register in the fight against money laundering and terrorist financing

The UBO register tries to combat money laundering and the fight against terrorism, but if such a large part of money laundering can be attributed to drug criminals, the UBO register is therefore especially useful if those drug criminals are registered in the register. The follow-up question is therefore whether drug criminals are listed in a UBO register; most of the people I've talked to about this don't think so. Thousands of honest entrepreneurs who have been working on their company for years, are listed.

Why then a UBO register full of privacy violations, if it is probably pointless concerning combating money laundering and preventing terrorist financing. It is the proverbial using a sledgehammer to crack nuts or a hidden agenda of the state and Europe.

Money laundering

In 2018, an investigation into money laundering was conducted by Utrecht University. Conclusion: The Netherlands has a money laundering problem. In 2014, the amount of money laundering is estimated by the research at 16 billion euros. View the full report here .

More than half of this amount, namely 9.1 billion, dan de helft van dit bedrag namelijk 9,1 miljard comes from abroad. No UBO register is required for this, but suspicious transactions abroad must be monitored for this. This is only possible in the case of cashless money. Cash is getting a bit trickier, but COVID-19 has curtailed cash transactions.   

So the size of the domestic money laundering problem in euros in 2014 was 6.9 billion. More than 90% of this amount comes from drug sales and fraud, according to the aforementioned report. 

For a long time I have searched for the size of the money laundering problem, measured in natural persons. The study by European Money Mule Action 5 (EMMA5) of December 1 provides an indication. In EMMA5, 650 banks, 17 bank associations and the financial investigation services of 31 countries worked together. All this for 3 months. EMMA5 has only resulted in 228 arrests of people who recruited Money Mules. There are not many. 

Actions by our own customers also point to a limited scope of the problem. At one customer 5000 compliance checks resulted in 37 files (0.7% of the file) that needed to be examined more closely. Incidentally, largely false alarm. Another argument to support the ‘using a sledgehammer to crack nuts’-suspicion.

Much is known about money laundering, according to the study. Known Facts:

1. Using ‘legal’ businesses to launder money. Frequently used money laundering branches are: car dealers, prostitution, massage parlors, taxis and, since COVID-19, also web shops.  Alles zonder inkoop is aantrekkelijk
2. Reselling (cash paid/ foreign) real estate is attractive for money laundering.
3. Criminal money is also invested in (existing) companies, often using legal intermediaries.
4. Geography is also important in money laundering, such as “maintaining relationships with countries of origin of large groups of migrants”. There are also criminal hotspots such as Marbella, Dubai and Marrakesh. The presence of a person on a hotspot possibly indicates a direction.

There are therefore reasons to believe that in the context of money laundering, the Financial Authorities are looking for a group of persons with a criminal background, who are probably not listed in a UBO register. These people cause 90% of the money laundering problem. There are enough leads in the research for more targeted searches.

The UBO register plays no significant role in combating money laundering and given the major violation of the privacy of those involved, the aim does not outweigh the means.