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Siobhain Egan Comments in Global Investigations Review

media-newsSiobhain has been quoted in Global Investigations Review discussing comments made by Andrew Bailey, Deputy Governor of BOE on the current state of international AML compliance practice and legislation. “Large banks will mostly use their own exacting global practice anti-money laundering standards, but the law of some countries compels banks to use local standards. This creates dangerous exposure to US regulators.”

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Money Laundering Wake up Call for Estate Agents - by Siobhain Egan

The property industry has long been suspected by regulators and prosecutors as an easy ‘mark’ for money launderers, and estate agents are the front line of the industry.

The OFT were previously responsible for the regulation of estate agents, but as of 1 April 2014 that responsibility has been transferred to HMRC, and in June 2014 they duly issued fresh guidance to the profession.

The regulators’ primary concerns focus on the source of funds and an increasingly worrying development: the passing off of stolen property, often sold at property auctions.

Estate agents must concentrate on KYC (‘Know Your Client’), which means checking to see if there has been any change in transactions, whether the property fits the client profile, scrutinising the source of the funds, and knowing when to make Suspicious Activity Reports (SARS).

Before the OFT handed over regulatory responsibility for the profession they investigated and fined three firms of estate agents for ‘significant and widespread’ anti-money laundering (AML) regulatory breaches. The fines totalled £246,665 which represents a huge increase on fines previously levied for similar breaches.

The OFT found that the firms:

  1. Failed to apply adequate customer due diligence measures;
  2. Failed to conduct ongoing monitoring of business relationships;
  3. Failed to establish and maintain appropriate policies and procedures, adequate record keeping, internal controls or risk assessments;
  4. Failed to train relevant employees to recognise deals or transactions which maybe related to money laundering and terrorist financing.

The property market is very vulnerable to abuse by money launderers, and real concerns lay in the huge influx of foreign buyers who have entered or are seeking to enter the market, and who are looking for a safe haven for their money. Some will be seeking to avoid the long tentacles of their domestic tax authority, and money that has evaded tax will be deemed to be the proceeds of crime. This potential issue presents an enormous headache for estate agents and all property professionals.

How should you as a property professional protect yourself?

  1. Confirm the customer’s identity before entering into a business relationship;
  2. Ensure ongoing monitoring of the business relationship;
  3. Retain records relating to the business relationship;
  4. Install checks and controls to anticipate and prevent money laundering;
  5. Appoint a Money Laundering Reporting Officer (MLRO);
  6. Train your staff;
  7. Ensure regular reviews of policies, procedures and trends in the market, or changes in customer activity.

What of the future?

The property market only has to look at how regulators have dealt with the banks to see how they may react. As they fully turn their attention to the property market this promises to be more regulatory enforcement, higher penalties and even criminal prosecutions.

We have specialist solicitors who have extensive experience in financial compliance, regulatory enforcement, criminal prosecutions and business (internal) investigations, who are ranked in the Legal 500, Chambers UK and Superlawyers UK.

Contact Lewis Nedas Specialist Solicitors

If you are affected by any of the issues above, please contact our experienced solicitors by calling 0207 387 2032 or completing our online enquiry form here.

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Latest News on Bribery Developments Worldwide

bribery developments worldwideGlaxoSmithKline, the multinational pharmaceutical giant, reported a 10% drop in its first quarter sales in 2014, according to the International Business Times (30 April 2014).

Their sales in China were badly affected after the Chinese Ministry of Public Security, alleged that GSK paid over £307million to Chinese doctors in bribes, through 700 agencies.

The Chinese investigation continues despite several arrests of GSK executives, some of whom have apparently admitted to bribery and tax offences.

Other international investigations have followed concerning similar allegations in Poland and Iraq, apparently breaching both the FCPA and the Bribery Act 2010.



Avon has settled with a Deferred Prosecution Agreement (DPA) as a result of FCPA violations in connection with Chinese bribery allegations.

The terms of the DPA, which has yet to be signed off, state that Avon will pay $68million to the DoJ and $67million to the SEC. The DPA will be of 3 years duration; there will be a compliance monitor in place for 18 months and then Avon will self-monitor for the remaining 18 months.



The SFO has opened an investigation into alleged Ukrainian corruption and money laundering, and has frozen $23million in assets held in the UK.

This follows a European-wide investigation which has seen assets frozen in Europe, allegedly belonging to 22 people suspected of misappropriating Ukrainian state assets.

The SFO has been under increasing pressure from the OECD to elevate its anti-corruption drive, amid criticisms that it has done little since the Bribery Act has come into force.

It has also sent officers to Paris to question senior executives of Alstom as part of their 5 year investigation into the company.



Hewlett Packard has agreed to pay $108million to the SEC in order to settle FCPA violations concerning allegations of bribery in Russia, Mexico and Poland.



The Americans have extended FCPA investigations in order to scrutinise recruitment practices following the ‘Chinese Princelings’ scandal. They are focusing on oil, gas and telecoms industries.

Mobile chipmaker, Qualcomm, has admitted that it may be subject to a FCPA investigation concerning ‘special hiring considerations’ given to those associated with state-owned companies and agencies in China.

Our specialist bribery/corruption and financial compliance lawyers will publish regular bulletins on topical issues in this field.

If you are facing an investigation (whether criminal or regulatory) or have a compliance issue, contact us on 0207 387 2032 or complete our online enquiry form here.

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Estate Agents Fined for Money Laundering Breaches

money launderingThe Office of Fair Trading (OFT) last week fined three separate estate agents, based in London, Northamptonshire and Cardiff respectively, a total of £246,665 for failing to comply with money laundering regulations. It is another example of the increased focus by regulatory authorities on compliance issues.

The Money Laundering Regulations 2007 are designed to prevent businesses from being used for money laundering or terrorist financing purposes and require regulated businesses to, for example, apply risk sensitive policies and procedures on the verification of customer identity, record keeping, training staff and reporting suspicious activity to the National Crime Agency.

In all three cases, says the OFT, the failures were found to be significant and widespread and included:

  • Failures to apply adequate customer due diligence measures when carrying out estate agency work.
  • Failures to conduct ongoing monitoring of business relationships.
  • Failures to establish and maintain appropriate policies and procedures on adequate record-keeping, internal controls or risk assessments.
  • Failures to train relevant employees in how to recognise and deal with transactions and other activities which may be related to money laundering and terrorist financing.

The companies in question have four weeks to appeal against the fines.

If you suspect that your company has committed a regulatory breach or a criminal offence we can help. Our business investigations team is led by Jeffrey Lewis and includes fraud, regulatory, money laundering, bribery and corruption, insider dealing, and tax and VAT specialists who are listed as leading practitioners by all the major legal ranking directories.

Contact Lewis Nedas’ Criminal Lawyers in London

If you have been charged with money laundering offences and require specialist legal advice, 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.

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Siobhain Egan discusses Anti-Money Laundering in ‘Finance Monthly’

How has the AML landscape changed this year?

2013 has been an extraordinary year for anti-money laundering compliance. The eye-watering fines imposed on banks for AML compliance failures imposed by US regulators, in particular, have led to acute reputational damage for these financial institutions and has been the catalyst for them to take AML compliance seriously.

Doubtless it is going to be a slow process for multinationals, and the cost of this compliance is going to be extraordinarily high. Hedge funds, for example, are spending on average between 5% and 10% of their operating costs on compliance, with the smaller hedge funds bearing a disproportionate burden. The banks are moving towards a more co-operative AML approach and are sharing common service platforms of intelligence etc in order to save costs.

Several of the multinational institutions have realised that a certain type of client base in certain jurisdictions (which are politically volatile, may be subject to sanctions, or are in emerging markets where there is lax AML compliance) are simply too high risk and too expensive to monitor, e.g. Barclays decided to pull out of the money transfers business, which attracted enormous publicity and has led to difficulties in Somalia.

In the UK the FCA highlighted AML in this year's annual report as being of primary importance and the Director of the SFO, David Green QC, has called for the equivalent of section 7 of the Bribery Act 2010 (i.e. the corporate strict liability offence of failing to prevent bribery) to be extended so that it could apply to other corporate offending, e.g. fraud and money laundering. This will require fresh legislation but is likely to have a sympathetic response in government circles. The defence to the corporate offence is that the company would have to prove on the balance of probabilities that they had adequate procedures in place.

The Fourth EU Money Laundering Directive emphasises the risk-based approached to AML compliance which will be nothing new to UK AML specialists. Under the Directive, politically exposed persons now include domestic PEPs, i.e. those who hold prominent public positions in the domestic country, which has been extended to include family and associates.

Another important aspect of the Directive focuses on the increased transparency of information concerning beneficial ownership of companies and trusts. The Directive will be implemented at some stage during 2015 in the UK.

Other developments on the AML landscape this year concern the abuse of digital currencies by money launderers and organised criminals; the application of FATCA; tax evasion/aggressive tax avoidance and the consequential undermining of the Swiss banking secrecy ethos; MTIC frauds (missing trader fraud), primarily fraud operating within the EU and arising because of the various VAT rates within the EU; renewed emphasis by the EU on gambling and the extension of additional money laundering checks in that sector; prepaid cash cards and mobile payments.

What regulations surround money laundering in the UK?

Essentially the primary regulations are found in the Money Laundering Regulations 2007 as amended by the Money Laundering (Amendment) Regulations 2011; principle 3 of the FCA Principles; Proceeds of Crime Act 2002 (as amended by SOPA 2005); the Terrorism Act 2000 (amended by ATCSA 2001); the Terrorism Act 2006; and the aforementioned EU Fourth Money Laundering Directive.

How can a business assess their risk of exposure to money laundering activities?

I would advise that any business assessing exposure to money laundering activities thinks laterally, flexibly, and moves away from the 'tick box' mentality, apply individually tailored systems and procedures which are reviewed regularly, be proactive, take nothing for granted or at face value, complete your customer due diligence (CDD), know your PEPs, know who are the true beneficial owners of the companies with which you are dealing, execute continued enhanced due diligence, and remember that this is an ongoing process throughout the relationship with your client/agent or business partner.

How should a business respond if they discover they have unwittingly become caught up in money laundering?

Immediately institute a full investigation bringing in an independent multidisciplinary team to assist. Note, this does not have to cost the earth. A good forensic accountant and specialist lawyer experienced in both criminal and regulatory work and dealing with the regulatory and prosecuting authorities should be sufficient. The important issues when dealing with the authorities is to report the breach to the regulators as soon as possible, simultaneously assess what remedies need to be applied to deal with that breach so that it does not reoccur, and remember that when considering self-reporting, real care must be taken. It is vital that you must come with 'clean hands' to the relevant authority, make no attempt to hide any information, documentation, or mislead them. We are fast approaching a new era of Deferred Prosecution Agreements which will be in force in February 2014 and will be applied initially by the SFO and the CPS. I fully expect DPAs will also be in the FCA armoury before long.

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