Follow the money: How to combat money laundering

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Anti-money-laundering (AML) measures remains a key component in the battle against financial crime, ensuring that dirty money is kept out of the banking system and doesn’t filter into commercial transactions. Apart from the banks, other financial institutions and professional service firms are also on the frontline in the fight against money laundering but firms face the biggest challenge in complacency. According to Louise MacDonald of HMRC’s Fraud Investigation Service, firms are advised to understand the risks and be alive to the constantly evolving threats in the landscape, as there is no one-size-fits-all approach to AML. MacDonald said the scope is all about assisting staff to comprehend the real-world impact of not taking enough care in their compliance responsibilities and not all about satisfying regulators to escape fine.

Whether drugs, violence, street violence or human trafficking, organized crime is being fuelled by money laundering and this can facilitate terrorist acts. This means firms should not be complacent about its AML defenses thinking it is complete. This can seem daunting. Money launderers have become expert at making illicit gains hard to spot, with their methods constantly evolving to keep one step ahead of law enforcement. It doesn’t matter what size a business is or what types of transactions are used, as criminals will target whoever they can. These targets can be complicit, but they are often either complacent or negligent. Firms and ICAEW are charged to ensure that firms put in place business risk assessments which will reveal their proper policies, procedures and controls. The National Crime Agency (NCA) wants to make the UK a hostile environment for money laundering and reduce the harm money laundering can cause. A key initiative for the NCA is to increase the quality and quantity of SARs when money laundering or terrorist financing is suspected.

ICAEW is working hard to support the NCA and other initiatives to combat money laundering. Through its role as a money-laundering supervisor, it has been monitoring its firms on anti-money laundering procedures since 2007. This activity is being stepped up in 2020 as Michelle Giddings, Head of AML and Operations, explains. “ICAEW is supporting the NCA by working to continuously improve the quality of SARs submitted to the NCA by ICAEW firms.
ICAEW is cognizance of the fact that its firms can only increase the number of SARs they submit if they understand what money-laundering risks look like. ICAEW is working with law enforcement and other professional body supervisors to identify current money-laundering typologies. ICAEW is also increasing the range of AML resources it produces for its firms and members. Meanwhile, a working group is producing resources to help members and firms with know-your-client research skills. The group’s first project, which took place in February, was a webinar on understanding how to carry out effective due diligence on clients who may be politically exposed persons.