The UK has been warned that it faces being left behind
in the global fight against money laundering unless it works with the European
Commission’s new anti-money laundering (AML) agency.
The establishment of the Anti-Money Laundering
Authority (Amla) and is one of a raft of measures due to be brought in as part
of the EU’s action plan to combat money laundering, which will be introduced on
20 July.
Amla will operate on an EU-wide basis, independent of
member states’ national authorities – a move designed to give it greater
authority to both identify and penalise significant money laundering acts.
The EU will first have to table the legislation needed
to create the agency and it is expected to be operational by 2024. Amla will
also have new powers to fine businesses up to 10% of their turnover for
breaching AML rules.
It will also be assessing money-laundering risks posed
by countries outside the EU, which includes the UK. While Amla will not be able
to issue fines directly on UK companies, it looks set to be a driving force in
the international effort against dirty money.
The action plan is the EU’s boldest step yet against a
growing problem. Billions of euros of suspicious transactions are estimated to
take place each year but enforcement is hampered by the inconsistent patchwork
of regulations across the continent.
“By directly supervising and taking decisions towards
some of the riskiest cross-border financial sector obliged entities, the
authority will contribute directly to preventing incidents of [money laundering
and terrorism financing] in the union,” states the draft document.
“It will coordinate national supervisory authorities
and help them to increase their effectiveness in enforcing the single rulebook
and ensuring homogenous and high-quality supervisory standards, approaches and
risk assessment methodologies.”
According to UK regtech firm SmartSearch, the EU’s
move is a welcome one and should be backed by UK businesses.
“The formation of a dedicated resource to tackle the
growing problem of money laundering, primarily through sectors such as the
property market, is a positive step by the EU,” said SmartSearch chief
executive John Dobson.
“Since the outbreak of the global pandemic, we’ve seen
organised criminal gangs in the UK taking advantage by exploiting loopholes in
AML processes and using increasingly more sophisticated forged ID documents to
get their dirty money through the laundering process.
“Of course, this is a global issue so it’s vital that
the UK coordinates its response with the EU and other nations, as organised
crime gangs won’t be concerned about political borders,” added Mr Dobson.
The UK’s Chancellor Rishi Sunak announced the
formation of a new taskforce to tackle tax evasion and fraud as part of his
March Budget announcement. The new Her Majesty’s Revenue and Customs department
is set to employ 1,000 extra investigators.
Mr Dobson said the taskforce must coordinate its
efforts with Amla and other international and national agencies.
“Obviously as we are no longer part of the EU, this
new authority will have no jurisdiction in the UK, but in order to be able to
fight the threat of money laundering here in the UK most effectively, it’s
vital that we coordinate and cooperate with the AMLA, otherwise we risk getting
left behind,” he said.
UK businesses have not been immune to the challenges
from AML – from the cost of compliance to the large penalties handed out for
contraventions.
A report by LexisNexis Risk Solutions in June found
that UK financial institutions were spending more than £28bn on AML compliance,
equivalent to half of the UK’s defence budget.
AML efforts have also been challenged by the rise of
cryptocurrencies in recent years, although the Metropolitan Police in the UK
this week seized nearly £180m of bitcoin following an international
investigation.
“While cash still remains king in the criminal word,
as digital platforms develop we’re increasingly seeing organised criminals
using cryptocurrency to launder their dirty money,” said Metropolitan Police
deputy assistant commissioner Graham McNulty.
There have also been some more embarrassing money
laundering convictions recently. In June a former AML expert who spent 14 years
as the chair of the Association of UK Payment Institutions was found guilty of
laundering £850,000 – the proceeds of an investment scam.
CRE
© Commercial Risk Europe
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