Breaching the terms of the Money Laundering Regulations 2007 may result in a heavy fine and even imprisonment.
Despite these dangers, many businesses fail to prevent such practices. A 2011 survey by the Financial Conduct Authority (FCA) showed that 75% of banks had failed to perform the procedures set out by the regulations. As a result, these financial institutions faced huge fines.
Here at First4lawyers, our expert money laundering solicitors are here to help protect you and your business in light of tighter controls on the exchange of funds. Contact us and we can look into your case. We can even help in terms of anti-money laundering training.
What is money laundering?
Money laundering is the process of disguising the original source of the proceeds of criminal conduct. Criminals do this by making such proceeds appear as though they came from a valid source. Essentially making ‘dirty’ money appear as though it is ‘clean’ – hence the term laundering.
The law recognises two key factors in a money laundering offence:
- The act of laundering itself e.g. providing the means to cover up the true source of the money.
- First or second hand knowledge or suspicion relating to the source of money or the conduct of a client, colleague, or customer.
How is money laundered?
Money is laundered in a wide range of complex and inventive ways, but often follows three distinct stages:
- Placement – This where funds from illegal activity are introduced in the financial system. This could occur at banks, shops, casinos, or any entity which deals in a form of economic trade.
- Layering – This process involves disguising the source of the money. Criminals do this by converting the money into ‘monetary instruments’ such as cheques, banker’s drafts, or postal orders. It could also involve using the money to buy high value items, which can then be sold on.
- Integration – This consists of moving money around the economy to further disguise the illegal source of the funds. This could involve property dealing, front companies and false loans, foreign bank complicity, or false import/export invoices.
What is the penalty for money laundering?
The UK has some of the toughest money laundering laws in the world. Under the Proceeds of Crime Act 2002, this offence can result in a maximum sentence of 14 years in prison. It could also mean restraint and confiscation proceedings.
What can I do to prevent money laundering within my organisation?
If your business is covered by the Money Laundering Regulations, you must put certain controls in place to prevent your business from these practices and prevent money laundering. These include:
- Assessing the risk that your business will be used to launder money.
- Checking (and sometimes) verifying the identities of your customers.
- Verifying the identity of ‘beneficial owners’ of corporate entities and partnerships.
- Observing your customers’ business activities and reporting them to the National Crime Agency (NCA) when suspicions arise.
- Ensuring you have the proper prevention controls in place.
- Retaining all documents relating to financial dealings, the identities of your customers, management procedures, and risk assessments.
- Ensuring that all employees are aware of the regulations and are trained to deal with the issues involved.
How can my employees report suspicious activity?
If your company operates under the Money Laundering Regulations, you must appoint a nominated officer as part of the controls that you are obliged by law to put in place. You don’t need to do this if your business doesn’t have any employees. If this is the case, then you are directly responsible for informing the NCA yourself.
Once you, or your nominated officer, suspect that money laundering is taking place, you must inform the NCA immediately.
My organisation is being investigated for money laundering – what should I do?
It is vital that you seek professional advice immediately.
First4lawyers can act for professionals who find themselves caught up in money laundering investigations whether as suspects or witnesses. Our experts are here to provide specialist advice on the steps you can take to reduce the impact of such an investigation.
To protect your interests and those of your business from the legal effects of money laundering, call First4lawyers. You can also reach us online via the Request a Callback button at the top of the screen, or by filling in our enquiry form.