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.
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.
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.
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.
We have blogged earlier this year (14/06/2013) about the arrests of those involved in Liberty Reserve, the Costa Rican based virtual currency and online payment network, by the US authorities.
The FBI have now recently arrested (2-3/10/2013) Ross William Ulbricht, AKA ‘Dread Pirate Rebel’, of the online market place known as ‘Silk Road’. It is alleged that this organisation was part of the ‘dark web’, and facilitated drugs trafficking and money laundering using the virtual currency BITCOIN to achieve this.
It has also highlighted the vulnerability of peer to peer virtual currencies such as BITCOIN to abuse by criminals.
‘Silk Road’ used a service known as ‘TOR’, originally invented by US Naval Research Laboratory, which is part of the deep web used to hide data and protect the identity of users. It is used for legitimate purposes by journalists involved in sensitive investigations for example, and cannot be accessed by the usual search engines.
According to the FBI, ‘Silk Road’ had nearly a million users and was trading some $1.22 million per month. In their thirty-three page affidavit they state that ‘Silk Road’, which has been in operation since 2011, facilitated $1.2 billion worth of sales, of which Ulbricht kept $80 million in commission. They continue to state that of the 1 million registered users 146,946 accounts were used to purchase goods in nearly 1 million separate transactions. One third of users were from the US; the remaining users largely from the UK and Australia.
Liberty Reserve was also used, quite legitimately, by some individuals as an alternative to systems such as PayPal. They would be charged a 1% fee for each transaction and a 75% privacy fee.
Cash would be paid to Liberty Reserve, using legitimate facilities e.g. credit card or postal order, converted into the virtual currency and transferred to another account holder who can withdraw the funds.
Bitcoin has tremendously vocal and powerful backers, mainly in the US Silicon Valley, who have invested huge amounts in this virtual currency. After news broke that ‘Silk Road’ used Bitcoin, the value of its shares initially fell but the company fought back with an aggressive public relations drive and share prices recovered quickly.
The US authorities have ensured that the virtual currencies abide by strict AML compliance and have the usual reporting obligations of currency movements over the value of $10,000 and a duty to register as a money exchange business with the US Treasury Service. BITCOIN had previously lobbied, rather optimistically, to self-regulate.
The IRS strongly suspected that FATCA offences were being committed with US Nationals using virtual currencies to facilitate tax evasion, and European regulators are of the belief that many in cash strapped countries such as Spain or Greece are using these virtual currencies to protect their money.
BITCOIN relies on BITCOIN exchanges to covert the virtual currency into other currencies.
An interesting aspect of the ‘Silk Road’ prosecution was raised by Jacob Gershman in his blog (Wall Street Journal 03/10/2013) about the seizure, restraint and confiscation of the virtual currency involved.
The complexity of the situation required a novel approach by the authorities. After all, how does one restrain assets that only exist in the virtual world and not the real one? Gershman states that each BITCOIN has a private key i.e. a secret sequence of numbers attributed to each coin. The keys are stored offline in specially encrypted wallet files and in order to access the wallet you will need the password. In short, in order to seize/restrain or confiscate the BITCOIN, the authorities will need the password.
What if they are unable to break the password? That would require the assistance of the owner of the password. This is causing legal problems in the US, less so here. The Courts have recently imprisoned an individual who refused to give up the password to his computer.
Therefore, in order to seize the $3.6 million digital currency held by ‘Silk Road’ the Federal Judge had to make a specific order in these terms:
“Authorities to seize any and all BITCOIN contained in wallet files residing on ‘Silk Road’ servers by transferring the full account balance in each ‘Silk Road’ wallet to a public BITCOIN address controlled by United States Authorities.”
The FBI are still in the process of attempting to recover Ulbricht’s commission, referred to earlier in this piece. This also begs the question, what are the authorities going to do with these seized assets (BITCOINS) in the event that they successfully prosecute Ulbricht? Auction them? Continue to track them to ensure that they are not going to be used for illegal purposes?
The UK’s NCA recently arrested four men in Manchester and Devon on drugs supply offences as a direct result of the ‘Silk Road’ arrests. The NCA press release emphasised that ‘Silk Road’ was used by child pornographers, suppliers of drugs and firearms, money launderers, and people traffickers.
So how exactly did the US authorities manage to pull down ‘Silk Road’? It has been strongly suggested in IT circles that the US authorities, possibly the CIA and/or the NSA, hacked the server of ‘Silk Road’, probably using TOR and some international assistance to do so. The server could have been physically located in Iceland/Romania or Latvia. In any event we are unlikely ever to be told the full story. This will lead to interesting disclosure and PII arguments in court.
However, despite the bullish press release by the NCA, it is likely that any number of copycat ‘Silk Road’ sites will continue to appear and will grow increasingly more sophisticated. This is going to be a continuing expensive investigative exercise for the authorities, absorbing a great deal of their time and resources.
If you are the subject of a cybercrime investigation, contact our leading and top ranked defence specialists either by using our online enquiry facility or telephone us on 020 7387 2032.
A US multiagency investigation has resulted in civil recovery and asset restraint proceedings being issued against those who have allegedly laundered the proceeds of crime stolen from Hermitage in New York last week.
In 2007 the Moscow offices of Hermitage were raided by Russian tax officials, which preceded a large sophisticated tax fraud on the company (and the Russian taxpayer) to the value of $240 million. Hermitage’s lawyer, Sergei Magnitsky, who uncovered the fraud, was later murdered in prison.
Bill Browder of Hermitage has literally moved Heaven and Earth to ensure that the lawyer’s death, the fraud, and the political corruption which has covered up both crimes, is constantly in the public arena. Thanks to Bill Browder’s unwavering commitment, the US passed the Magnitsky Act 2012 and there have been a series of multi-jurisdictional freezing orders and money laundering investigations worldwide.
The US proceedings concern $24 million of high end Manhattan property. They assert that the monies from the fraud passed through several accounts in Austria, Cyprus, Estonia, Finland, Latvia, Lithuania, Switzerland and Hong Kong, and then through a Cyprus-based property company which eventually purchased the US property.
The US proceedings concern a bare 10% of the stolen monies but will the US authorities’ investigations and proceedings stop there?
Surely they must also be investigating the US banks that received the monies from Cyprus, the NY property brokers, the US lawyers, and the accountants involved on both sides of the property transactions? Where were their due diligence and AML compliance procedures?
This raises another aspect of money laundering investigations. Because of the breadth of both US and UK anti-money laundering legislation, anyone involved in or who has advised upon the movement of proceeds of crime can be investigated and face either civil or criminal proceedings.
Civil recovery and asset restraint proceedings are regularly used in the UK by the FCA and the SFO, and will be the focus of the newly created NCA.
We can expect to see more of these types of proceedings used here. They are quick, cheap and, because of the low standard of proof, it is easier for the authorities to mount these proceedings.
If you require advice on any of the issues raised in this article please contact us. We have over thirty years’ experience defending money laundering, asset restraint, civil forfeiture, white collar/corporate crime and tax fraud.
Contact us by either completing our online enquiry form or by calling us on 020 7387 2032.
There has been a recent spate of high profile money laundering investigations and prosecutions by the US authorities involving the art world one way or another, for example: the seizure of the painting ‘Hannibal’ by Jean-Michel Basquiat by the US as part of the Brazilian banker Edeman Cid Ferreira fraud/tax evasion prosecution; the arrest and pending prosecution of international art dealer Helly Namad concerning allegations of money laundering for the Russian mafia; the return of $33 million worth of art to a victim hedge fund in the prosecution of former lawyer Mark Dreier by US Marshals; and the case against Glafira Rosales concerning an allegedly fraudulent $30 million scheme involving fraudulent art sales.
British art exports have reached record levels this year, certainly since pre-financial crash levels, and foreign art enthusiasts have spent over £2 billion acquiring British art and antiques, with most of the purchases going to super-rich Russians, Chinese and Gulf nationals and residents.
It is difficult to understand why the British art scene has not, apparently, been subject to similar scrutiny by the UK authorities.
The art market is dominated by its trademark secrecy and a complete lack of transparency. Transactions can be difficult to trace with private collectors buying and selling, often through complex multi-faceted offshore structures or intermediaries and brokers.
Many of these transactions are settled in cash; monetary values are dependent upon the individual assessments of experts (not necessarily reflecting true market value) and what price the purchaser is prepared to pay.
Art is portable and relatively easy to move around. The seizure of ‘Hannibal’, as previously mentioned, is an excellent example of this. Edeman Cid Ferreira was sentenced in Brazil to 21 years imprisonment for fraud, tax evasion and money laundering. Prior to conviction he smuggled $30 million worth of art out of Brazil. The painting ‘Hannibal’ was purchased by a Panamanian company for $1million in 2004; that company tried to sell it in 2007 for $5 million and had it shipped to New York. It was dealt with by four individual shipping agents and two countries, including the UK, before it arrived in New York, without being labelled with a customs declaration as being of monetary value in the sum of $100! In the US any item sent to that country valued at less than $200 does not need a customs declaration label.
The gist of an interesting article in Der Spiegel (24 July 2013), highlights the issue of art and possible tax evasion / money laundering. It asserts that the über rich are moving their money out of the banks, purchasing art and storing them in art warehouses. This against the current international backlash against off shore accounts, as well as the US pursuit of US tax evaded monies using FATCA, various international tax agreements (and the reciprocal provision of tax and financial information), and multi-jurisdictional money laundering investigations.
Swiss governments have repeatedly delayed the application of money laundering regulations to the business of art, which is huge business for the Swiss. There are a number of large scale art warehouses in Geneva; two major European banks are also acquiring art warehouses for their customers. Luxembourg and Singapore are following Switzerland and are also building vast art warehouses with state of the art security, advertising these warehouses as ‘tax free emporiums’ and, in Singapore’s case, promising discretion and tax exemption.
It cannot be a coincidence that Switzerland, Luxembourg and Singapore have long been established offshore tax havens.
There are of course money laundering regulations in the UK, Europe and the US which apply to the art business and without a doubt the larger, more established dealers and auction houses will have anti-money laundering compliance AND KYC systems in place. However, even the most cautious and professional art dealers can find themselves facing a charge under various sections of the Proceeds of Crime Act 2002 simply by acquiring or selling an item that could represent the proceeds of crime or tax evaded monies. They are very often dealing with new emerging markets and a fast changing client base.
In the UK, most art dealers will be subject to HMRC’s money laundering regulations, in place since 2004, which govern high value dealers, involving SARs and other stringent reporting conditions.
If you require any advice and assistance in relation to any of the various issues mentioned in this blog please contact us by completing our online enquiry form or call us on 020 7387 2032.
Scarcely a day goes by when one doesn’t read of a bank being investigated or fined for money laundering. Recent examples include the conclusion by the Italian authorities that the Vatican Bank facilitated money laundering; the Italian inquiry focused in particular on the transaction of $30 million. The Latvians fined one unnamed Latvian bank the highest fine for laundering, €170 million, stolen from the Russian government in connection with the money laundering scheme, identified by the late Sergei Magnitsky, and pursued by the courageous and determined Bill Browder of Hermitage, and HSBC have finally signed off the Deferred Prosecution Agreement which meant that they have received the highest fine to date, some $1.9 billion, for laundering proceeds of crime in the sum of billions for various South American drugs cartels, and apparently for other breaches of US sanctions concerning Iran, Libya, Sudan, Burma and Cuba.
Certainly it is true that most of the money laundering horrors which have come to light originated in the pre-economic crisis era, but what have the banks been doing since then other than paying eye-watering fines, largely to the Americans? To be fair, the Basel Committee on Banking Supervision has put money laundering and banking regulation firmly at the top of their agenda this year, and Barclays have just announced their exit from providing services to remittance businesses, which will largely affect any immigrant communities in the UK.
However, according to both Martin Wheatley and Tracey McDermott of the FCA, the banks have really done very little, having just finalised their recent enquiry into bank ‘trade finance’ businesses. The FCA have found that nearly 50% of the seventeen banks that they scrutinised (including four major UK banks) still did not exercise adequate AML due diligence, and failed to have adequate AML procedures in place. The FCA promise to exercise their full and recently enhanced powers in order to deal with this situation and promise a joint two-pronged attack both by the FCA and the PRA.
The FCA levied fines in the sum of £312 million in 2012, which is an increase from £89 million in 2011. Not all of those fines related to money laundering, but it is clear they intend to maintain, if not surpass, the 2012 fine levels in the future, and of course these fines are now paid directly to the treasury rather than supporting the FCA as has happened in the past.
Additionally, the director of the SFO, David Green QC, has complained the difficulty in attempting to instigate a criminal costs prosecution against a corporate organisation in the UK. He has suggested that an extension of section 7 of the Bribery Act 2010 (failure to prevent bribery, i.e. to install and execute adequate anti-bribery compliance systems) could be made to apply to fraud and money laundering (with the aid of fresh legislation), and that it would dovetail nicely with the forthcoming Deferred Prosecution Agreements (DPAs) and encourage the corporates to self-report their criminal offending.
Deferred Prosecution Agreements (DPAs) have been used by the US since the 1990s and have, over recent years, managed to levy staggering fines. Despite the fact that the American regulatory and prosecution agencies have codes of practice and sentencing guidelines in relation to DPAs, it is fair to say that the US system can be criticised for its inconsistency, lack of transparency, and a rather partisan approach which they have adopted.
Courtesy of the Crime and Courts Act 2013, DPAs will now be a feature of the criminal justice system in this country. The SFO and the CPS have recently published a consultation focusing on the draft code of practice for Deferred Prosecution Agreements.
The important difference between the US DPA system and the proposed UK system involves judicial scrutiny. In the US, the Judge’s role is perceived by the US authorities as simply ‘rubber-stamping’ the DPA, though very recently some US Judges have raised their heads above the parapet and asserted that federal judges have the authority to review such DPAs, much to the ire of the American authorities.
The SFO and the CPS have recently published a consultation on their proposed code of practice in Deferred Prosecution Agreements, and it is envisaged that DPAs will come into practice in February 2014.
In many ways, the joint code of practice is an improved variation on the US system. It is designed to ensure consistency, transparency and confidence in these agreements, bearing in mind that they are having to convince a cynical judiciary (who universally hate DPAs) and the general public who are of the view that prosecutors feel these large corporate offenders are simply too big to jail, and that the agencies do not have the funds to prosecute them. The evidential test, such as it is, under the proposed SFO/CPS code in relation to the application of a DPA suggests that these agencies will enter into a DPA where they have reasonable suspicion of corporate offending. This is a very low threshold. Nobody seriously expects the tsunami of DPAs that has occurred with the US authorities; in fact it is envisaged that these DPAs will be few and far between.
Simultaneously, the Sentencing Council for England & Wales, under the chairmanship of Lord Justice Leveson, have published their consultation on proposed sentencing guidelines dealing with money laundering, fraud, bribery and corruption, and corporate crime. This guideline will then underpin the level of fines set by the SFO and the CPS when using the new Deferred Prosecution Agreement system.
The consultation promises huge fines; indeed companies could be fined as much as 400% of the profits of criminal behaviour. The consultation then goes on to list aggravating and mitigating circumstances, for example if corporate offending had caused substantial harm to the integrity of markets or governments and involved cross-border offences. As too would be the targeting of a large number of victims, in particular vulnerable victims and where those victims suffered substantial harm, which is not necessarily financial harm. The consultation cites voluntary reporting as a mitigating factor. It states that any fine levied on the offending corporate organisation must be “substantial enough to have a real economic impact which will bring home to both management and shareholders the need to operate within the law.” The Courts must weigh up whether or not the fine would put the corporate out of business, but the consultation document insists that in “some bad cases this will be an acceptable consequence.” One of the issues that the Sentencing Council had to consider was that the fines to be levied against corporates for criminal behaviour have to be on par with the US system, otherwise the multinationals, in particular, will go ‘jurisdiction shopping’ and seek out the jurisdiction perceived to be the softest as far as these issues are concerned.
The advice that legal practitioners will be giving to corporate offenders would be to confess as early as possible, to be seen to be repenting for their sins in real terms, such as ‘gold plated’ compliance systems, the installation of an independent monitor, regular reviews of their systems, and close levels of supervision.
Corporate offenders would be advised to ‘confess’ to the relevant authorities as early in the process as is possible. They must come with ‘clean hands’ and be determined that there will be no repetition of such behaviour in the future.
The use of Deferred Prosecution Agreements in this country heralds a new approach to corporate offending and it will be fascinating to see the developments they will bring in the future.
If you require any advice or information, please contact Jeffrey Lewis or Siobhain Egan (formerly a member of the Sentencing Council of England & Wales, and who advised on the current consultation), complete our online enquiry form, or call our head office on 020 7387 2032.
Caroline Bingham of the Financial Times (05 June 2013) reports that the SFO Director, when recently addressing a city law firm, bemoaned the difficulties when attempting to prosecute a corporate.
Unlike his US counterparts, where legislation is in place to do so, here the additional problems of identifying the ‘controlling mind’ and/or ‘piercing the corporate veil’ make it well-nigh impossible to bring a successful prosecution, generally because of the complex nature of many corporate and management structures.
David Green QC believes that if S.7 Bribery Act 2010 (failure to prevent bribery, i.e. install and execute adequate anti-bribery compliance systems) could be extended to apply to fraud and money laundering (with the aid of fresh legislation), and it would dovetail nicely with the forthcoming DPAs (Deferred Prosecution Agreements) and encourage the corporates to self-report.
At present the general view of those of us who defend SFO prosecutions is that without any genuine threat of a corporate prosecution why should the corporates self-report and enter a DPA?
It will be interesting to see if and when the Director gets his way.
News broke on 27/28 May 2013 of a joint longstanding investigation and prosecution by the US Department of Justice and the Costa Rican authorities into Liberty Reserve, the online currency and payment network. This operation resulted in seven arrests in Costa Rica, New York and Spain.
The Americans state that Liberty Reserve is allegedly the biggest money laundering scheme in the world; they further allege that 55 million financial transactions were facilitated by the company, laundering some $6 billion.
It will be argued by prosecutors that Liberty Reserve provided the largest underlying financial infrastructure for cybercriminals all over the world. It apparently also forms part of an earlier prosecution this year which led to the indictment of eight US citizens accused of stealing $45 million from bank machines in twenty-seven countries.
Liberty Reserve only demanded of a client the barest of information: name, address and email address. It did not execute any due diligence or KYC of their clients at all. The clients would rely upon third parties known as ‘exchangers’ where a third party would take the physical cash for a fee and convert it into Liberty Reserve. These exchangers are largely unlicensed/unregulated money transmitting businesses, which are, according to the Americans, based largely in Malaysia, Russia, Vietnam, and Nigeria.
Barclays are fully co-operating with the authorities, as it seems that Liberty Reserve held an account with them in Spain, which shows how easy it is for even the largest of banks to be affected. Forty-five accounts used by Liberty Reserve have been seized by the authorities as well as assets of thirty-five other sites that allegedly fed funds to Liberty Reserve.
The next question is: where are those involved in cybercrime going to move their money? One major competitor to Liberty Reserve is under constant surveillance by the Russian FSB, and international prosecuting authorities are closely watching twelve other similar setups.
If you are the victim of money laundering or a finance or legal professional investigated either for money laundering regulatory breaches or have been charged with such an offence, you will need top money laundering specialist solicitors.
Our leading criminal lawyers can advise you upon every aspect of money laundering, whatever your perspective.
Contact Jeffrey Lewis, Siobhain Egan, Miles Herman, Keith Wood, or complete our online enquiry form.
The FCA (Financial conduct Authority) has just imposed a fine of £4.2 million on EFG Private Bank (a reduction of 30%) after finding that the Bank’s AML (anti-money laundering) compliance systems were lacking.
This follows the recent BBC Panorama programme which alleged that £35 million of stolen funds from the Russian Treasury (the Magnitsky probe led by the brave and determined Bill Browder) were laundered through ten UK registered front companies. A full report is currently being considered by City of London Police and SOCA.
The Austrians also point fingers at the UK, having come under pressure like Luxembourg to relax their banking secrecy laws, saying that they will only do so when the UK cleans up their offshore tax havens in the Channel Islands, BVI and the Caymans.
So what is the UK doing about these allegations of industrial money laundering through its companies, banks, and offshore tax facilities?
To be fair, there has been some movement, however slow, to deal with these issues. The SFO and other prosecution authorities are anxiously waiting for DPAs (deferred prosecution agreements) to take effect in 2014 so that they can use them to pursue corporates for money laundering, fraud, bribery and corruption. The UK’s Sentencing Council, (under the Chairmanship of LJ Leveson) is drafting a sentencing consultation on DPAs and those related offences, so as to bring some consistency of approach to this issue.
However, all this pales in comparison with the aggressive approach favoured by the US who have spearheaded the international anti-money laundering drive and have ‘mopped up’ financially as a result, with monumental fines.
FATCA (the US Foreign Account Tax Compliance Act) has been incredibly effective. Banks have fined 30% withholding charge on tax monies due to the IRS that have not been declared by US citizens and it has brought the whole issue of money laundering, and indeed aggressive tax avoidance, to the fore.
So, how can this affect you?
If you are a legal, banking, or finance professional it is very easy, for even for the most cautious of us, to get caught up in money laundering, and the authorities are taking a much tougher stance against those professionals. It is vital to know when to make a SAR (suspicious activity report) and to have the best and well executed AML (anti-money laundering) systems in place.
We are currently advising worried professionals, including those under investigation and corporates who are facing difficulties in this regard. Jeffrey Lewis is our key contact.
Money laundering for the lay individual is also providing to be something of a headache, not just in terms of conducting business but also those who are having cash monies seized and restrained.
We have years of unparalled success when dealing with these issues. Contact Jeffrey Lewis.
The European Commission recently adopted two proposals to reinforce the EU’s existing rules on anti-money laundering and fund transfers. The Commission believes that, as the threats associated with money laundering and terrorist financing are constantly evolving, regular updates of the rules are required.
Money laundering is defined by HMRC as:
the exchange of “money or assets that were obtained criminally for money or other assets that are ‘clean’. The clean money or assets don’t have an obvious link with any criminal activity. Money laundering also includes money that’s used to fund terrorism, however it’s obtained.”
A series of regulations are in force in the UK to deal with money laundering here, and these implement the Third EU Money Laundering Directive.
The European Commission has been reviewing the Directive, and has now put forward a package of measures to reinforce the current regime. These include:
Risk-based approach
According to the Commission, the measures will provide for a more targeted and focused risk-based approach.
In particular, the new Directive:
According to the Commission, the two proposals should reinforce the sanctioning powers of the competent authorities by introducing such things as a set of minimum principle-based rules to strengthen administrative sanctions and a requirement for them to coordinate actions when dealing with cross-border cases.
“Dirty money has no place in our economy, whether it comes from drug deals, the illegal guns trade or trafficking in human beings,” said Home affairs Commissioner Cecilia Malmström. “We must make sure that organised crime cannot launder its funds through the banking system or the gambling sector.”
For specialist legal advice regarding the new EU money laundering laws or for criminal defence against money laundering charges or investigations, please contact Jeffrey Lewis or Siobhain Egan on 020 7387 2032 or complete our online enquiry form here.
Money laundering is often thought of in terms of big business or property transactions, but new figures released this week by Financial Fraud Action UK (FFA UK) highlight the spread of a scam which dupes ordinary members of the public into becoming ‘money mules’.
The scam takes the form of fake job offers, often made online using titles such as ‘Money Transfer Agent’ or ‘Payment Processing Agent’. The recipient of the offer is invited to receive money into their bank account and transfer it to another account, retaining a cut for themselves.
In reality, the money received is stolen, often the result of fraud on accounts, and is then laundered to overseas bank accounts.
This activity is illegal and carries a number of consequences, including a prison sentence of up to ten years.
The research shows that these offers are received by around 15% of adults in the UK – with fraudsters specifically targeting people on low incomes. Of those who have received such an offer, a fifth (21%) admit to having considered accepting the work, and 6% went on to volunteer.
When extrapolated these figures mean that as many as 380,000 people could become unwitting money launderers.
According to DCI Dave Carter, Head of the Dedicated Cheque and Plastic Crime Unit, the scam is the work of determined international criminals, aiming to turn the public into an unwitting army of accomplices to fraud.
For further information on our money laundering criminal defence services please click here or for our AML business advisory and compliance services click here. To speak to our solicitors, please contact Jeffrey Lewis or Siobhain Egan on 020 7387 2032.