This chapter brings together the book’s analysis and argues that crucial yet feasible reforms can be made to the operation of the global anti-financial crime regime. They include distinguishing between various categories of regulated services, such that certain essential services – for example, basic bank accounts – must be provided to everyone but attract reporting obligations, whereas highly specialised services with a significant potential to facilitate money laundering – for example, high-end investment banking activities – must be refused if a suspicion arises that proceeds of crime are involved. The chapter also argues that the FATF Recommendations should be revised to explicitly require countries to maximise intelligence-gathering opportunities that serve law enforcement purposes while minimising the risk of complicity in money laundering, terrorist financing or proliferation financing. In particular, this should entail the requirement for countries to ensure that the regulated businesses’ AML/CTF compliance efforts are aligned with the country’s law enforcement priorities, whether through public–private partnerships, ‘keep open’ laws or other appropriate means.

Over the past decades, multiple areas of law – including anti-money laundering (AML), counterterrorist financing (CTF) and sanctions rules – have emerged that regulate the interactions of the legitimate economy with known or suspected criminals. These rules impose significant compliance burdens on regulated sectors and their effectiveness is often contested. Furthermore, they raise profound civil liberties questions, such as whether one can be excluded from banking or other services based on a mere suspicion of crime or what the permissible extent of financial surveillance is. Despite the growing recognition of the extraordinary role that AML/CTF and sanctions laws play in shaping our societies, there have been few attempts to trace in detail the historical evolution of global thinking about the dilemmas that those laws present, with a focus on key policy tensions rather than the mere development of laws and institutions. This chapter offers an introduction to the overall book project and outlines the policy intentions it studies.

This chapter begins by setting out the history of AML regulation, which spans many centuries and jurisdictions. The regime we have is best understood as a product of evolution, rather than intelligent design, stemming from intuitions about complicity in crime and the benefits of financial surveillance. Section 2.1 outlines the development of thinking about money laundering as a species of complicity in the predicate crime. Section 2.2 covers the genesis of the two central tenets of the AML regime: reporting obligations, ranging from suspicious activity reporting to multiple other modes of reporting, and customer due diligence. Finally, Section 2.3 traces the genesis of the international AML regime, as relates both to substantive rules and its institutional architecture. In particular, it explores how and why the FATF, an initially ad hoc grouping convened in Paris in 1989, became the primary vehicle for the development of international standards against money laundering. The conclusion brings together the lessons that this historical experience holds for understanding the financial crime challenges of today.