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Money laundering is a dirty business

Friday 09 November 2018

Criminals employ a range of techniques to clean their “dirty money”, with the scale of money laundering having a devastating impact, so it's important that you understand how to check for the warning signs of financial crime – and what to do if you suspect criminal activity.

Professionals working in the property, accountancy and legal sectors are being targeted because of their expert skills and services, which can give a cloak of legitimacy to illicit cash. This gives professionals a crucial role to play in protecting the UK’s economy, and wider society by reporting suspicious activity.

While money laundering isn’t always obvious, the consequences are severe and even accidental involvement in money laundering could mean losing your licence, receiving a fine, or facing criminal prosecution. To tackle this threat, the UK Government is working with targeted industries through Flag It Up, to promote best practice in anti-money laundering compliance and reporting suspicious activity.

The National Crime Agency’s National Strategic Assessment of Serious and Organised Crime 2018 states that there is a realistic possibility that the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds. And not only a crime in itself, money laundering is also a key enabler of other serious crimes such as modern slavery, drugs trafficking, fraud, corruption, and even terrorism.

Know the signs, report the crime

So how do you spot financial crime? Here are some of the red flags of potential money laundering activity, although this list is not exhaustive, it contains some of the most common red flags across all professions. You should make sure you are familiar with these indicators, and be on alert for them when dealing with both new and existing clients:

  • Transactions: are transactions unusual because of their size, frequency or the manner of their execution, in relation to the client’s known business type?
  • Structures: do activities involve complex or illogical business structures that make it unclear who is conducting a transaction or purchase?
  • Assets: does it appear that a client’s assets are inconsistent with their known legitimate income?
  • Resources: are a client’s funds made up of a disproportionate amount of private funding, bearer’s cheques or cash, in relation to their socioeconomic profile?
  • Choice of Professional: have you, or a colleague been instructed at a distance, asked to act outside of your usual speciality, or offered an unusually high fee?
  • Political Status: is the client engaged in unusual private business given that they hold a prominent public title or function? Or do they have ties to an individual of this nature?
  • Documents: are information or documents being withheld by the client or their representative, or do they appear to be falsified?
  • Identity: has a client taken steps to hide their identity, or is the beneficial owner difficult to identify?
  • Behaviour: is the client unusually anxious to complete a transaction or are they unable to justify why they need completion to be undertaken quickly?
  • Geographical Area: is the collateral provided, such as property, located in a high-risk country, or are the client or parties to the transaction native to or resident in a high-risk country?

If you’re suspicious, Flag It Up!

If you suspect that money laundering may be taking place, you are legally obligated under the 2002 Proceeds of Crime Act, to submit a Suspicious Activity Report (SAR) to the National Crime Agency.

A high quality SAR can provide crucial intelligence for law enforcement and can help to prevent a wide range of serious and organised crime and terrorist activities. Investigations are often based on multiple SARs, and your report could be the missing piece of the puzzle. Further information on how to submit a SAR can be found on the NCA’s website.

Download the Flag It Up campaign materials and content pack