There should be criminal procedures for poor money laundering practices

Martin Cheek

June 20, 2019

Martin Cheek is managing director of SmartSearch

In a speech delivered at the Global Investigations Review Live event in London recently, Mark Steward, director of enforcement and market oversight at the Financial Conduct Authority (FCA) said the FCA is currently conducting ‘dual track’ Anti-money laundering (AML) investigations into “significant AML system and control issues”.

This dual track approach – which means AML breaches could give rise to either criminal or civil proceedings – may have caused some debate. Steward says there shouldn’t be anything controversial about it, given that market abuse investigations have been conducted on a ‘dual track’ basis for many years.

He also said that making a decision about whether a case should face criminal charges or not before the investigation had even begun would it be “inconsistent with the investigative mindset.”

And I couldn’t agree more. It is important to show that AML breaches are serious and by making it a criminal offence, it better highlights the severity of the consequences of having poor AML systems and controls in place.

Inadequate AML is not just an admin problem, it goes far deeper than that. According to the National Crime Agency (NCA) “money laundering underpins and enables most forms of organised crime”. And, although there are no exact figures, it is estimated that the scale of money laundering in the UK is in the hundreds of billions of pounds.

This is clearly a huge problem, and we need to show businesses that do not have sufficient AML processes in place, are not only enabling money laundering, but the serious organised crime it funds, including drugs, weapons and human trafficking.

And while not every investigation into AML failings will bring about criminal prosecutions – in fact, they will probably be the minority – the threat of criminal proceedings needs to be there.

Steward says that the FCA needs to “enliven the jurisdiction if we want to ensure it is not a white elephant” and says that is what they intend to do when they find strong evidence of “egregiously poor systems and controls and what looks like actual money-laundering”.

There will be many regulated businesses understandably concerned by his warnings now worrying that they are at risk of prosecution because their AML systems are not up to scratch. But there is a solution.

Electronic verification is now widely recognised as the most reliable, secure and efficient source of information for identity solutions. Not only is it quicker, cheaper and easier than manual checks, but it is also much more reliable, as it can match documents with information from major data suppliers like Experian, Equifax, Dow Jones and Companies House. Some systems even offer a retro service enabling businesses to upload their current and past client base within 24hrs to ensure all record keeping is up to date too.


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