Cases of money laundering hit the headlines regularly. This week the spotlight fell on the Vatican, with the BBC reporting that a former Vatican accountant is one of three people charged with laundering money through the Vatican Bank.
Less reported, but just as interesting, is new research from BDO LLP, the accountancy and business advisory firm, revealing a sharp rise in both the total value and number of reported cases of money laundering in the UK.
Rise in Money Laundering
BDO’s FraudTrack report, which looks at all reported fraud cases over £50,000 in the UK, has revealed that there were 39 reported money laundering cases in 2013 - up from 33 in 2012. This increase is dwarfed by the rise in the total value of reported money laundering fraud offences, which rose by 309% in 2013 - up from £70 million in 2012 to £288 million last year.
Some of these reported cases involved huge sums of money. For example, £170 million was laundered through a bureau de change in Notting Hill, and in another case, £52 million was laundered by a courier in the East Midlands.
Why the Increase?
The report's author, Kaley Crossthwaite, Head of Fraud at BDO LLP, suggests that the rise may be partly down to an increase in organised crime activity, but that the demand for transparency in the financial services sector is also surely playing a part.
“The laundering of ill-gotten gains is largely carried out through the financial services sector and the increased legislation and compliance imposed on largely unsuspecting businesses operating in this sector seem to be uncovering increasing numbers of illegal transactions that may have historically been swept under the carpet,” she warned.
This scrutiny is likely to continue, and indeed become more focused, given that the EU is focusing on completion of the Fourth EU Money Laundering Directive, while the Financial Conduct Authority and the Serious Fraud Office have given clear signals that money laundering is in their sights (see our earlier blog for more details).
Increase in Financial Services Fraud
Increased regulation and transparency within the financial sector is also likely to be behind the FraudTrack report’s finding that while the total amount of fraud fell from £1.37 billion in 2012 to £1.05 billion in 2013, the total value of financial services fraud rose from £473 million in 2012 to £532 million in 2013.
"We firmly believe that the ever increasing regulatory and compliance burden imposed on Financial Services firms by the FCA and PRA [Prudential Regulation Authority] means that fraud which historically may not have been reported, but rather dealt with privately in-house, is now coming out driven by a growing demand for transparency," said Kaley Crossthwaite.
Other Types of Fraud
Although money laundering is the most prevalent form of fraudulent activity identified in the FraudTrack report, accounting for £288 million (27.4% of all activity), it is not the only type of fraud highlighted. After money laundering, the most common types of fraudulent activity identified by BDO were:
- Third party fraud - £209 million (20.0% of all activity)
- Unauthorised use/ misuse of assets - £76.6 million (14.1% of all activity)
- Tax fraud - £142 million (13.5% of all activity)
- Employee fraud - £77.8 million (7.4% of all activity)
- Corruption - £75.8 million (7.2% of all activity)
- Mortgage fraud - £75.6 million (7.2% of all activity)
Contact Lewis Nedas’ Criminal Lawyers in London
For specialist legal advice on fraud charges, including money laundering, please contact our solicitors Jeffrey Lewis or Siobhain Egan on 020 7387 2032 or complete our online enquiry form here.
This blog post is intended as a news item only - no connection between Lewis Nedas and the parties concerned is intended or implied.
