How to identify and prevent money laundering in the UK

2 Mar 16

Money laundering often presents itself as pieces in a jigsaw puzzle. It’s only when the whole jigsaw is assembled that the picture becomes obvious

Money laundering for most people is a complex area to navigate. However, with serious and organised crime costing the UK at least £24bn each year, according to official government statistics, it’s an area many professionals need to get to grips with. Whilst recent amendments to the Proceeds of Crime Act make it difficult for people in the UK to move, hide and use the proceeds of crime, counter fraud professionals, accountants and finance professionals need to remain vigilant. 

That is why government is working with the industry to provide professionals with best practice guidance on how to protect their business reputation and ensure that they do not become entangled in criminal activity.

Accountants, finance professionals and counter fraud specialists play a pivotal role in the early detection of behaviours and transactions which may otherwise go unnoticed. While large-scale corruption remains an area of concern, smaller amounts of funding, or so called ‘low level or low risk’ activities, are frequently used to finance crime and terrorism and may fail to be detected. This is because the methods of moving money are usually quick and simple, and include use of cash mules, pre-paid gift cards, pre-paid credit cards and diversion of funds. 

Furthermore, accountants are often privy to a great deal of confidential information from clients, such as future and existing revenue streams, wire transfers following cash deposits, and they may also be aware of tell-tale signs such as negative media coverage about a client or company. Being privy to this type of information may enable an accountant or finance professional to assemble all the pieces of a jigsaw before anyone else does. 

So what are some of the warning signs or red flags which accountants and finance professionals, including counter fraud specialists, need to be aware of?

Warning signs to watch for include:-

  • Unusual business activity, such as inconsistencies in information or discrepancies in transactions
  • Being unable to ascertain sources of funds
  • Transfers of money where there is no apparent business relationships
  • Sending or receiving funds by international transfers to/from locations of concern – keep an eye on HM Treasury sanctions list for high risk jurisdictions
  • Wire transfers following cash deposits
  • Negative media coverage about the client/company

 

To help, the CIPFA Counter Fraud Centre recently supported the launch of two new guides from the CCAB’s Anti-Money Laundering Taskforce. The guides - CCAB Guidance Accountants and Counter Terrorist Financing and CCAB Guidance Money Laundering Regulations – highlight typical indicators of money laundering and terrorist financing. Download a copy of the guides here.

The guides provide comprehensive instruction and information for accountants, finance professionals and counter fraud specialists on recognising and dealing with money laundering. One of the key findings is that greater transparency is needed across the European Union and accountants should act to shape a culture of integrity rather than a culture of compliance in the UK and beyond. 

So what should an accountant, finance professional or counter fraud professional do when faced with this type of situation?

If you spot anything suspicious, submit a confidential suspicious activity report (SAR) to the National Crime Agency. Under the Proceeds of Crime Act, professionals have a legal obligation to report suspicious behaviour and can have a vital role to play in efforts to tackle organised crime.

Furthermore, the enactment of the Serious Crime Act 2015 made it a criminal offence to participate in the activities of an organised crime group.

For more information on the Flag It Up campaign and advice from CIPFA, visit www.accountancysupervisors.co

CIPFA Counter Fraud Centre provides expert advice and training to public sector organisations, finance professionals and accountants.  For further information and assistance contact 0207 543 5600 or visit www.cipfa.org/counterfraudcentre.

  • Rachael Tiffen

    is head of the CIPFA Counter Fraud Centre. For more information, visit cipfa.org/counterfraudcentre and cipfa.org/counterfraudtraining

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