The executive director of Transparency International, Robert Barrington, expressed his concerns that extremist groups are using corrupt money laundered through the City of London to radicalize individuals at the London Fraud Forum’s annual conference.
Mr Barrington suggested that the suspicious activity reporting system was not working effectively, and that a more global approach was required, urging London to work with other financial centres to combat suspected money laundering. Mr Barrington also suggested that the role of professionals, including lawyers and accountants, in facilitating money laundering required further attention.
This is perhaps a change in tone from some previous commentators, who have stressed the need for robust money laundering laws and regulations, but not the ripple effect of allowing funds to be laundered.
For a number of reasons, money laundering is likely to be a key focus of the UK government over the next few years. These include:
- The Fourth Money Laundering Directive, which came into being on 25th June 2015 and must be implemented by the UK government by 26th June 2017. This will revise the existing Money Laundering Regulations, and require UK corporate entities to provide details of any beneficial owners to relevant law enforcement and regulatory bodies, and any other entity required to undertake due diligence under the regulations.
- The Financial Action Task Force (FATF), the inter-governmental body established to promote standards and measures for combating money laundering, is likely to conduct a mutual evaluation of the United Kingdom. A firm date has not been set, but the previous evaluation was conducted in December 2006.
- The focus on “professional enablers” has continued, featuring prominently in the NCA’s National Strategic Assessment of Serious and Organised Crime published in July 2015. Both the SRA and the FCA have recently reiterated their requirements to have systems and controls in place to detect and prevent money laundering. The SRA have visited 270 firms thought to be at high risk of money laundering, resulting in 20 requiring a return visit and two or three “quite serious” investigations
- The HM Treasury National Risk Assessment of money laundering and terrorist financing (NRA) was published on 15th October 2015 and is covered in a separate blog.
Robert Barrington has chosen to focus on the practical effect of money laundering, an issue perhaps overlooked by regulators in explaining the necessity of procedures.
The success, or otherwise, of anti-money laundering provisions depend on many factors. One of the key criticisms of the current provisions is a lack of enforcement, both in terms of prosecutions for the secondary money laundering offences under sections 330, 331 and 333 of the Proceeds of Crime Act 2002, or the Money Laundering Regulations 2007, and a limited number of public regulatory enforcement actions.
Considering the well documented cuts in the budgets of law enforcement agencies and regulators, it seems fanciful to suggest a huge surge in prosecutions for money laundering is likely. Perhaps a more effective focus might be the reputational damage that could be caused if it later transpired that the monies handled by a regulated firm were used in serious organised crime or terrorism.
To read more about money laundering offences under section 330, 331 and 333 of the Proceeds of Crime Act 2002, see our Practical Law practice notes, Offences under section 330 of the Proceeds of Crime Act 2002, Failing to disclose offence: nominated officers in the regulated sector and Tipping off offence.
To read more about the Money Laundering Regulations 2007, see our Practical Law practice note, Money laundering: offences under the Money Laundering Regulations 2007.