anti money laundering regulations

Money laundering is something which most of us think is carried out in the seedy world of drug barons and terrorist organisations. You are right, but it is much more widespread than that. Way back in 1996, the International Monetary Fund stated that between two and five per cent of the world’s economy involved money which had gone through the laundering process. It is almost impossible to put an accurate figure on money laundering due to its secrecy and complexity, but it is known to be in the billions of US dollars. This is a scary statistic and proves that there is much to be done to try and identify and counteract this international dilemma. This is where the anti money laundering regulations come into practice.

What actually is money laundering?

Money laundering is a generic term to describe what happens when criminals wish to change ‘dirty’ money from their criminal activities into ‘clean’ money that they can use legitimately. This is done through ‘washing’ the proceeds through a bona fide institution, thus disguising where the funds originated and making the money ‘clean’ again. This laundering is often carried out through financial organisations, often unintentionally. The very nature of the products and services carried out by these establishments make them susceptible and open to these crooks and their ill-gotten gains.

The process can be and has become increasingly complex and sophisticated over the years as technology has developed. However, it is basically carried out in three stages:

  1. Placement – when the proceeds from criminal activity are passed into the financial system
  2. Layering – the fundamental phase when the funds are ‘washed’ to conceal the real ownership and how and where they were ‘earned’
  3. Integration – when the laundered resources are returned to the economy as ‘clean’ money.

Where does money come from to be laundered?

‘Dirty’ money is generated and laundered all over the world, and is not always ‘washed’ in the same country of origin. The source of most of the money laundered is not surprising. Illegal operations such as terrorist funding, drug trafficking, arms smuggling, prostitution, fraud, robbery and bribery and corruption comprise the vast majority of laundered money.

How is the UK tackling money laundering?

The government has brought in Money Laundering Regulations to help fight serious and organised crime. The aim is to deter and disturb financial money laundering and reduce the incidences of the use of legitimate businesses (usually financial institutions) to cleanse money, either deliberately or innocently.

Companies such as Money Laundering Compliance Limited offer support to businesses under the auspices of anti money laundering regulations. They offer a range of services such as customer verification, training, consultancy and publications to help them identify, prevent and manage attempts to involve their businesses in possible money laundering and compliance matters. The organisation is a member of the Business Tax Centre (BTC) group of companies and is managed by a team of highly qualified Accountancy, Business Law and Money Laundering Compliance professionals. BTC itself is allied to the International Compliance Association, run by the British Bankers Association who participated in the Joint Money Laundering Steering Group.




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