Handbook of Anti-Money Laundering.

CHAPTER 23TIPPING OFF

23.1 INTRODUCTION

It is easy for books on money-laundering deterrence and terrorist financing to focus almost entirely on the steps taken to identify, monitor and investigate criminal activity. However, there are other obligations which are also important. Tipping off is one area where specific additional attention must also be given to the direction of a firm's employees and also those who work internally within a firm. Such obligations extend to contractors, interim staff and also outsourced service providers.

So, what is tipping off? It is letting the customer know that they are, or might be, the subject of a suspicion. The objective of making tipping off illegal is clear: it is to ensure that nothing is conducted which might hamper an investigation. If a money launderer is tipped off, they are often able to hide their tracks and disappear before the appropriate investigations can be conducted. Clearly, this severely inhibits the objectives of money-laundering deterrence and consequently the sanctions for getting this wrong can be draconian, but vary between jurisdictions.

Money-laundering deterrence is also dependent on the discretion of those who investigate and report suspicions of money laundering. The prevention of money laundering would be severely undermined if money launderers were alerted by the staff of the firm as soon as a suspicion arose, since the funds would most likely disappear to another jurisdiction. So, tipping off could occur at ...