Money laundering: how to stop criminal networks in their tracks

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The continued threat posed by criminal networks makes it more important than ever for professional services firms to play their part in preventing money laundering.

Serious and organised crime costs the UK £24bn annually, and threatens the safety of the British public. Accountants form a crucial part of the front line when it comes to spotting suspicious financial activity and other markers that may lead to the conviction of criminal gangs.

Security Minister Ben Wallace has called for a “joined-up and relentless response to money laundering”, urging the accountancy profession to play its part.

“Working with industry to help professionals spot the warning signs of suspicious activity will make things even harder for those seeking to evade the law,” he said.

According to the NCA, billions of pounds of the proceeds of crime are laundered through the UK every year. “Taken as a whole, money laundering represents a significant threat to the UK’s national security,” the NCA said in its latest report on the impact of economic crime.

Separately, they add that there is a “marked overlap” between money laundering and terrorist financing, with criminals and terrorists using similar methods to move and store funds. “Finance is an essential aspect of enabling terrorist groups to function, recruit and commit terrorist acts,” the NCA said.

Complacent professional services firms run the risk of becoming unwitting enablers of criminals trying to bring illicit cash into the UK economy, and the consequences for their professional reputation can be severe.

Those firms and individuals that become involved in money laundering, whether knowingly or not, face the possibility of loss of licence, fines or even a prison sentence.

According to government studies, the accountancy profession carries a high risk for money laundering, a status it shares with banking and legal service providers. Anthony Harbinson, chairman of the Consultative Committee of Accountancy Bodies (CCAB) anti-money-laundering task force, highlighted the importance of stopping money laundering when he stated: “For economic criminals to succeed they must be able to conceal the origins of their ill-gotten gains.” Mr Harbinson added that “the role of gatekeeper to the legitimate financial system is a very important one and that client-related suspicious activity should always be reported to the relevant authorities”.

Nigel Kirby, deputy director of the National Crime Agency (NCA) economic crime command, says: “Most businesses comply with legislation and regulation, and play an important role in tackling money laundering. However, professionals can mitigate the risk of being unwittingly involved through proper compliance and due diligence checks, and by having a good awareness of money-laundering indicators.”

Carrying out the appropriate due diligence on all clients is vital to stop the rise of economic crime and terrorist financing. Accountants are in a crucial position to spot ‘red flags’ for money laundering, and to alert the appropriate authorities.

Appropriate due diligence requires accountants to know their customer and also, in some situations, to identify the “beneficial owner” of a company or partnership. This is particularly important if the person with whom you are dealing could be acting on behalf of somebody else.

Unusual transactions, deals with high-risk countries or dubious documentation may raise suspicion of possible money laundering in the course of, or at the beginning of, a client relationship. Complex business structures without a specific reason, or an excessive reliance on cash, are other possible markers for money laundering.

When these suspicions arise, it is vital to submit a suspicious activity report (SAR) to the UK Financial Intelligence Unit within the NCA. A SAR is kept confidential, but can lead to vital disruption to criminal activity. The most recent NCA report into the result of SARs shows more than £46m of assets were denied to criminals on the basis of these reports, impeding the financing of global criminal activity. The reports also led to the arrest of fraudsters and the assets of vulnerable people being recovered.

Most accountancy firms should have a trained money-laundering reporting officer (MLRO), and individual accountants must report to them as soon as they become suspicious. The MLRO should decide whether the suspicion is sufficient to make a SAR. If so, this can be made online.

The report should include full background on the identity of the subject, as well as comprehensive information on the basis of the money-laundering suspicion. The NCA’s guidance advises using ‘who, what, when, where, why’ as a framework. This information is crucial for the UK Financial Intelligence Unit to be able to effectively investigate suspicious activity and disrupt criminal operations. There is further guidance from the NCA on how to submit a SAR on the organisation’s website.

Know the risks from money launderers

The UK’s professional services companies are being targeted by money launderers, who use legitimate firms to bring the proceeds of serious and organised crime into the economy, investing it further into criminality and undermining the integrity of UK financial institutions and markets.

The Home Office is working with professional services firms through its Flag It Up! campaign to help honest enterprises avoid becoming enablers of crime.

Visit for more information about the dangers of money laundering and the steps being taken to combat it.

You can find further information on how to submit a suspicious activity report on the NCA website, and regulatory guidance is signposted through the Accountancy Affinity Group’s supervisory pages.

This article first appeared in the Telegraph. AAT has worked in partnership with the Accountancy Affinity Group, Home Office and NCA to develop the campaign Flat It Up!

Rosie Murray-West has written for the Telegraph.

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