Money laundering poses a significant threat to the UK, affecting our national security, prosperity, and international reputation. The financial sector’s pivotal role in the economy makes it susceptible to high-end money laundering, with criminals exploiting legitimate processes and services to move funds under the radar for their own personal gain.
Legal professionals, including accountants, lawyers, solicitors and estate agents, may unknowingly facilitate these schemes, jeopardising the integrity of the UK’s financial system. But the authority figures in the UK are fighting back, determined to crack down on money laundering and criminal networks exploiting regulations for their own gain.
In this article, we explore money laundering in depth, the proactive approach the National Crime Agency (NCA) is taking in combating the issue and analyse the importance of completing full due diligence.
The Exploitation of UK’s Business Environment
The UK’s vibrant business environment, characterised by ease of company establishment, is exploited by criminals who establish seemingly legitimate businesses for laundering illicit funds.
This extends both within the UK and offshore, with criminals leveraging the flexibility of the system to obscure the origins of the funds. Financial businesses and legal professionals can be exploited unknowingly and with developments in technology allow criminals to use more sophisticated measures, exploitation can be much harder to spot.
Large volumes of criminal money flowing through the UK not only jeopardise national security but also expose individuals and institutions to potential criminal and regulatory penalties imposed by UK, EU, and US authorities. This can have a severe impact on a country’s economic stability.
Money laundering schemes, especially high-end ones, often exploit legitimate processes and services, with legal professionals becoming unwitting or negligent accomplices. This small minority of professionals can act as intermediaries, using their expertise to create complex structures that move and store large amounts of criminal money while concealing ownership effectively.
The National Crime Agency’s Combative Plan
To combat money laundering, the NCA has crafted a response set up designed to tackle illicit activity head on and ensure criminals are caught but also others are deterred from committing similar offences .The NCA will target individuals engaged in money laundering, disrupting their techniques and consequently seeking to get any guilty individuals prosecuted. They will also attempt to recover and confiscate assets, making it harder to abuse the financial system and ultimately cut off established criminal networks.
In addition to this, the NCA will engage with financial investigators from across the law enforcement sector to give them advice and training. This training allows the NCA to support financial institutions and help support their own efforts to combat money laundering to develop new ways to spot signs and act from there.
The National Crime Agency (NCA) plays a crucial role, leveraging legislative powers from the Criminal Finances Act 2018, the NCA utilises tools such as Unexplained Wealth Orders and Account Freezing Orders to recover millions of pounds in criminal assets. Recognising the global nature of finance, the NCA collaborates with domestic and international partners to address the global threat of money laundering.
Private sector engagement is deemed critical to an effective response to money laundering. By working alongside major financial institutions, law enforcement can detect and disrupt money laundering activities both in the UK and globally. Identifying and arresting money launderers not only disrupts criminal activities but also makes the UK a less attractive environment for those seeking to launder criminal finances.
The Creation of the National Economic Crime Centre (NECC)
Alongside the proactive approach from the NCA, the creation of the National Economic Crime Centre (NECC) represents a significant step forward in the UK’s response to economic crime. By bringing together law enforcement, government agencies, regulatory bodies, and the private sector, the NECC aims to drive down serious organised economic crime and safeguard the country’s prosperity and reputation.
The UK Financial Intelligence Unit (UKFIU), responsible for receiving, analysing, and disseminating financial intelligence, plays a pivotal role in tackling money laundering. They receive over 460,000 Suspicious Activity Reports a year and these reports provide vital intelligence for tackling money laundering and illicit activity. These reports are shared across a secure channel to other law enforcement workers enabling great visibility and impact against these crimes.
Importance of Completing Due Diligence
For law firms, the aid from the authorities is a vital necessity in combating money laundering but legal professionals must also be aware of what clients they take on. Completing thorough due diligence is crucial, critical identity checks and company checks as well as source of funds data.
There are solutions out there for legal professionals to complete thorough due diligence on potential clients to eradicate the potential threat of illicit activity. Strides in technology are allowing firms to streamline processes as well as complete compliant checks, adhering to the regulations in place.
Innovative tech products like Verify 365 are allowing firms to complete full due diligence on potential clients and businesses, all on one platform. Verify 365 is the ultimate AML solution, allowing you to complete identity checks within minutes using our award-winning, government graded Biometric Identification Verification technology. In addition to this, you can complete company checks and analyse source of funds data. As part of one digital client onboarding workflow, our source of funds questionnaire feature delivers a paperless solution that gives you clear insight and analytics when identifying the origin of funds for a purchase. Using Open Banking and our source of funds questionnaire you can quickly identify any unusual financial activity.
It is innovations in technology like this that are changing the landscape and helping law firms combat AML challenges they face on a daily basis. Legal professionals are able to complete the necessary due diligence and identify exactly who they are working with. What’s more, innovations like Verify 365 are allowing firms to streamline their processes, enhance the overall client experience and crucially, complete compliant checks within the regulations in place.
The National Crime Agency’s Determined Stance
The threat of money laundering is real and multifaceted, posing risks to national security, economic prosperity, and international standing. The NCA have made their intentions clear, determined to tackle money laundering crime and challenges head on. They have outlined their response, elements of force alongside education to further enhance their own resources and other financial investigators.
This proactive approach emphasises a clear determination to protect the UK’s interests from illicit activity and money laundering. With the NCA’s heightened, active approach, this will ease some of the AML challenges presented to legal firms and other financial businesses as they look to ensure they are completing due diligence on potential clients.
