Are they the result of more businesses being brought within the regulatory regime, with each new sector added having many, many more businesses with it than the systems - focused on banks, insurance companies and securities businesses - were envisaged as ever having to deal with? 

In some jurisdictions, when counter-money laundering laws were introduced, only banks were within the regulatory reporting requirements. 

Many advisers denied, ignored, or didn't notice, that legislation required a general duty, on all individuals (as distinct from all persons) to report suspicions of money laundering. The regulated sector, as it became known, existed for two reasons. The first was so that a risk-management regime could be defined and enforced; the second was the false assumption that money, as it was then generally defined, always goes into a bank and therefore banks were the choke point for information relating to the money. The risk management systems were designed to provide a filter so that the nascent financial intelligence units, generally lacking in effective analytical technology and such as they had was certainly not powerful enough, in terms of speed and storage capacity. 

Everyone else was required to report suspicions to an ordinary copper, not to the FIU. That, if it was complied with (it almost never has been, anywhere) would have overwhelmed the police, with or without computers. 

In the beginning of counter-money laundering laws and regulations, in the mid 1990s, in most jurisdictions, there was a concentration on banks which resulted in an interesting issue: some jurisdictions had only three or four banks. Indeed, when I saw Barclays and one or two other smaller banks with offices in tiny jurisdictions, that was, to me, an indicator that there were dodgy dealings. In Narau, the presence of the big accountancy companies was so much that one of them had the largest tower block on the island named after it. It's where some of the foreign banks had the offices in which they housed their USD10,000 local banks or branches that cost even less. 

But places like Singapore and Malaysia had a very small number of local banks, too. The result was that the people in the FIU knew the money laundering reporting officers personally, even socially, something not available in the UK, the USA and Germany, for example.

Initially in SIN, only banks were required to make reports. Malaysia, its legal and regulatory regime coming in a few years later, covered a broader range of institutions - but still not to the extent that we have today.

This meant that the number of sources, the range of attitudes of MLROs etc. and the volume of reports that the FIU was expected to deal with was small.

That changed....

The ever expanding scope of the regulatory net

When I wrote "How not to be a money launderer" in 1996, I made it clear that it was aimed at high-risk industries outside the regulated sector. I said I hoped I'd see it on the desks of car dealers. That's because of the "everyone must report" provision: the book was intended to help people in business avoid finding themselves under investigation for money laundering. 

Some years later, car dealers and others were brought within the regulatory net. There was a simple approach but governments, by now wary of the costs of dealing with reports and of enforcing compliance, decided that complexity was better than an overworked FIU . Also, most did not have, arguably still do not have, an effective inspection and enforcement regime outside the banking, insurance, securities, legal and accounting sector. 

So while the general principle was modified : while businesses must have a risk system, they were excused the requirements for identification for transactions with a value of less than 15,000.  15,000 what, I hear you ask. Well, that depends on where the business is regulated. It could be euros, pounds or US dollars. They were called "dealers in high value goods" although that name has been widely deprecated. A cynic would say that was because it cast the net too wide. Gradually, precious metals, stones etc. have been formally brought into the regime but cars and fur coats, in many countries, have not. Yet cars and fur coats are amongst the favoured purchases of the rich end of the criminal spectrum. 

And, of course, the gradual acceptance of the position that "money" does not necessarily mean "cash" or, even, balances held in a bank account. Today, that seems obvious: 25 years ago, when I raised that, I was shouted down by big law firms, big accountancy.consulting companies, MLROs in big banks and even financial sector trade bodies. I was right, just not right then. 

This, rather than a focus on cash, means that reports were to be made relating to the customer (remember KYC, now largely abandoned in favour of computerised research and transaction monitoring) and that increase meant more work in the entire regulated sector.

The broadening of the regulated sector had an unintended consequence but it was not unexpected.

Across the UK, for example, bureaux de change are operated by non-Anglo Saxons. From Arabs to Indians, through Chinese to Eastern Europeans and pretty much everywhere anyone can think of. Many were not educated in the UK and of those that were, many do not have English as a first language. And yet, they are embroiled in a complex legal and regulatory regime. 

Bureaux de change have long been regarded as high risk for money laundering, in part because their community links provide a ready-made hawala/chop/hundi network. Their background presents a particular challenge: law and regulation is complicated: highly educated people with English as a first language struggle with it. Hell, many such lawyers struggle with it. Me included. And yet, we expect a micro-business in the back-streets of Burnley to cope with laws and regulations designed for, well, Barclays with the input of one of those consultancies that had the big office in Narau. 

So, they are faced with a choice of two options: report nothing or report everything. 

Thresholds. 

Different types of business, in different jurisdictions, have different thresholds for identification of customers. It can vary from zero (Malaysia - passport or local Identification required for all money changing) to thousands - but not always the same thousands. In the USA, it's USD3,000. In the UK?

The government issued guidance is more than 130 pages long and it frequently refers to "threshold for due diligence checks" but a search within the document for "threshold" does not find anything that says what it is. Nor, incidentally, does a search for "due diligence." Nor did I find anything to say I'd find that information in another document. 

So, with the best will in the world, such businesses are going to say "dunno" and ignore it or "I need to protect myself" and report everything. 

Thresholds.

Different types of business, in different jurisdictions, have different thresholds for identification of customers. It can vary from zero (Malaysia - passport or local Identification required for all money changing) to thousands - but not always the same thousands. In the USA, it's USD3,000. In the UK?

The government issued guidance is more than 110 pages long and it frequently refers to "threshold for due diligence checks" but a search within the document for "threshold" does not find anything that says what it is. Nor, incidentally, does a search for "due diligence." Nor did I find anything to say I'd find that information in another document.

So, with the best will in the world, such businesses are going to say "dunno" and ignore it or "I need to protect myself" and report everything.

So, by looking, albeit superficially, at just a couple of factors, i conclude that the increas in the number of reports comes not from an increase in diligance in reporting institutions but because of ill-thought out and ill-impllmented regulations and policies.