Flagging is nothing, it would flag based on name similarity and all kinds of stuff but a human would have to review it. They use scoring, review clients and transactions while prioritizing on that score. Half of their time goes on optimization of the scoring and detection as the human review process is resource intensive.
If they had a system rising millions of flags, the first thing they would do is to reduce these flags to a manageable level. There’s no way that so many transactions are high risk, they would get rid of clients rising that many red flags if those are legitimately risky transactions.
If they don’t do good job in the compliance department, they receive multiple billion dollar fines. Simply, no client is valuable enough to risk these fines. Rise some flags and you’re out and reported to a regulator, they’re not going to let you flood the system with questionable transactions.
Even when the opportunity cost of doing so was in the billions...
The software OP mentions probably flagged transactions internally to another team to review, any genuinely suspicious ones would have then had a SAR submitted.
[0] https://www.nationalcrimeagency.gov.uk/what-we-do/crime-thre...
But generally: everyone has implemented US FACTA. All the old-style tax havens bar one or two have implemented (all the BOTs have). Laundering your money through London is an unbelievably bad idea, and has been for a long time (FATCA was the end, the US applied this extraterritorially so any bank that wanted to operate in the US had to comply globally).
What people get confused about is: it is perfectly legitimate to have money in any of the locations you mention (it helps you avoid exactly zero tax) but it isn't legitimate to not report those accounts to your tax authority (and all UK institutions, even in BOTs, are legally obliged to report the names/details of people involved in transactions...no question), and if that local tax authority chooses not to act on that information there is not much that can really be done (some places have said they won't comply i.e. Russia but most tax authorities aren't communicating tax information back to banks anyway).
Btw, software that flags suspicious transactions is used everywhere and that information is acted on (the FCA has regulators who check this, for what should be obvious reasons banks tend to be careful about who exactly does these investigations...if you work in this job, the FCA goes through your personal emails, they investigate your family, they investigate your friends, all your bank accounts are monitored...it isn't a joke). The issue is more often that the software doesn't work (i.e. a certain location has been flagged as high-risk but the software doesn't flag it)...and even then, firms are fined tens of millions on the spot if faults with their software are discovered. It is difficult to say that the UK is soft (particularly when most of the large scale tax loss is governments collaborating with large corporations to funnel profits).
We also did this with the Bribery Act 2013.
Moving money from Jersey isn't a crime.
It's absurd in a lot of big cities, simply because land is scarce and governments fail to see that this leads to a failing market. On top of this, they fail to plan the construction of new houses.
If I were someone who needed defensible transfers of large amounts of wealth in discreet transactions, London real estate laws certainly are convenient.
Not sure if this is still going on, but it was pretty big a decade or two ago.
Do you folks realize being able to read everyone's communications and being able to see, verify and control all financial transactions is the exact same curtailing of liberty?
Despite being intangible like communications, transactions are perhaps better evidence that something tangible has happened or is about to happen.
Why even bother write a detection software then? Just flag all transactions, and you get the same level of plausible deniability.
/s
Anecdotally - I spoke to a Goldman Sachs guy who quit - he made software to flag “suspicious” transactions. He said it flagged millions everyday. Money coming in from Saudi Arabia, Gibraltar, Panama, Jersey etc.
I asked him why did he quit? This seemed like a useful thing. Stopping such transactions is a good thing, no?
He said “you don’t understand. All the software did was flag the transactions. It didnt stop them. It just marked them as ‘suspicious’”
I was blown away. “Why have a piece of software that just flags the transactions and does nothing??”
He said “Because that’s what the law demands. And so that when we get caught, we can go to the Parliament in the inquiry and say ‘you’re absolutely right, our software did mark this as a problem!’”