The Terrorism Act 2000 (TA) and the Proceeds of Crime Act 2002 (POCA) brought money laundering and compliance with anti money laundering legislation into the daily work of insolvency practitioners. Its relevance to the reality of working life in the UK has been questioned, not least in 2014 by the person who asked for statistics about the number of prosecutions for money laundering offences under POCA under the Freedom of Information (Scotland) Act 2002. There had not been any prosecutions at all for tipping off between 2009 and 2014 (presumably in Scotland) and annual prosecutions for the other money laundering offences did not always reach double figures.
In September 2017 the Chancellor of the Exchequer was asked how many successful prosecutions there had been under the Money Laundering Regulations 2007 from 2010. Since 2010 9705 people had been successfully convicted of money laundering offences, mostly under POCA. Since 2010 just 10 people had been successfully convicted of breaching the Money Laundering Regulations 2007.
These statistics have been used to support the view that the anti money laundering legislation was a bureaucratic cost that served little purpose. Compliance with the anti money laundering legislation was accordingly carried out as quickly and cheaply as possible, typically by completing a brought in checklist.
The introduction of the Money Laundering Regulations 2017 (MLR) on 26 June 2017 has changed the culture of compliance with anti money laundering legislation, however. Compliance with MLR is now actively monitored and regulated and it is understood that the rather unenthusiastic approach towards bringing prosecutions for money laundering offences has also changed.
Many professionals such as insolvency practitioners are perhaps at risk of inadvertent involvement in a money laundering offence because of their work with a client who is guilty of the actual offence. It is for this reason that prompt, effective customer due diligence is so important for insolvency practitioners. If directors’ real reason for putting a company into liquidation is to bring an illegal project to a legal end, and an insolvency practitioner assists in this by putting the company through the liquidation process, this could be the money laundering offence of arranging or carrying out money laundering on behalf of others (S328 POCA).
It should be noted that in its methodology for firm wide risk assessments the ICAEW includes insolvency as high risk of being involved in money laundering or terrorist financing activities.
A sobering example of an organisation being inadvertently involved in a client’s criminal activity is ING, the Dutch bank that is described on its website as a leading international corporate bank. Because criminals were able to launder money through their ING accounts ING was charged with money laundering offences and in September 2018 paid 775 million euros to settle the case.
ING’s CEO commented ‘we have made unacceptable mistakes’ and ‘ING has since improved its procedures for admitting and vetting clients’.
Providing high quality compliance consultancy advice that is specifically tailored to suit the individual needs of each client is central to RMCSC’s mission and this includes advice and training about compliance with MLR and the defence to involvement in money laundering offences. RMCSC has experience in providing assistance with business wide risk assessments, policies, controls and procedures and has also carried out Reg 21 MLR independent audits of policies, controls and procedures that have already been put in place.
Please contact me on firstname.lastname@example.org or 07854 967976 if you would like any more information about how RMCSC can help with your anti money laundering legislation compliance or to learn more about any other of RMCSC’s insolvency compliance consultancy services.