20201118 Source of funds, source of wealth and unexplained wealth.

Velben begins with the excess of food, drink and drugs – making a point that it is the wife’s job to administer these:

“the ceremonial differentiation of the dietary is best seen in the use of intoxicating beverages and narcotics. If these articles of consumption are costly, they are felt to be noble and honorific.

Therefore the base classes, primarily the women, practice an enforced continence with respect to these stimulants, except in countries where they are obtainable at a very low cost. From archaic times down through all the length of the patriarchal regime it has been the office of the women to prepare and administer these luxuries, and it has been the perquisite of the men of gentle birth and breeding to consume them.

Drunkenness and the other pathological consequences of the free use of stimulants therefore tend in their turn to become honorific, as being a mark, at the second remove, of the superior status of those who are able to afford the indulgence.

Infirmities induced by over-indulgence are among some peoples freely recognised as manly attributes. It has even happened that the name for certain diseased conditions of the body arising from such an origin has passed into everyday speech as a synonym for “noble” or “gentle”. It is only at a relatively early stage of culture that the symptoms of expensive vice are conventionally accepted as marks of a superior status, and so tend to become virtues and command the deference of the community; but the reputability that attaches to certain expensive vices long retains so much of its force as to appreciably lesson the disapprobation visited upon the men of the wealthy or noble class for any excessive indulgence. The same invidious distinction adds force to the current disapproval of any indulgence of this kind on the part of women, minors, and inferiors. This invidious traditional distinction has not lost its force even among the more advanced peoples of today. Where the example set by the leisure class retains its imperative force in the regulation of the conventionalities, it is observable that the women still in great measure practise the same traditional continence with regard to stimulants.”

Remembering that the most commonly used narcotics of the day were opium and cocaine, in addition to alcohol, it is surprising that anyone ever functioned at all, if Veblen’s cynicism were borne out. He presses his point: “The quasi-peaceable gentleman of leisure, then, not only consumes of the staff of life beyond the minimum required for subsistence and physical efficiency, but his consumption also undergoes a specialisation as regards the quality of the goods consumed. He consumes freely and of the best, in food, drink, narcotics, shelter, services, ornaments, apparel, weapons and accoutrements, amusements, amulets, and idols or divinities.”

So, how does this all relate to financial crime in today’s context?

I’ll be somewhat briefer than Velben would have been.

Basically, proceeds of criminal conduct such as fraud, corruption, etc. are generally considered easy money. Many people live by the adage “easy come, easy go” and much criminal proceeds is spent on fripperies – expensive cars, houses, holidays, jewellery and, of course, a lavish social life often while not appearing to do anything much to earn it.

We can view it as unexplained wealth.

Source of funds, source of wealth and the customer’s antecedents are the most obvious means of making an assessment during the Know Your Customer process and during the business relationship.

No buzzwords, no acronyms and nothing new: that’s what we really learn from reading material such as Veblen’s book.

Read it yourself – free – at http://www.gutenberg.org/cache/epub/833/pg833.txt .

While you read it, think not just about the words in front of you but about the wide range of concepts behind it and how they apply to our daily tasks in financial crime risk and compliance.

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© 2016 Nigel Morris-Cotterill
All rights reserved.

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