The financial institutions have done a very good job of keeping the proceeds of crime out of the financial system. They were the first entities to be bought under the UK AML regime back in 1993. The money launderer however is imaginative in his schemes.
Many international reports have highlighted the army of professionals now involved in any major money laundering scheme, mostly unwittingly. The money launderer needs professionals to invest his money for him, to help him in the purchase of property, the obtaining of credit, setting up insurances or a pension scheme or operations of money transfer and cheque cashing facilities, it can also the laundering of money through business, creating a wealth of opportunities for financial crime, as such;
The regulated firm’s are deemed to be the “gate keepers” of the financial industry.
In business, who commits financial crime? This can be simply broken down into the following;
- The business leaders and/or owners
- Employees
- From outside of a company – its customers, suppliers or contractors
- External collusion with internal employee or owner participation, or
- The criminal in possession of the proceeds of crime who need to launder them.
They types are generally motivated by;
- Greed
- Financial difficulty
- Avoiding detection
This highlights that the money launderer is not just someone who deals in drugs or counterfeit goods such as cigarettes; it is quite possibly someone who uses the financial system to commit fraud. Cheque and benefit fraud are common occurrences for cheque encashment businesses. Tax evasion on legitimately earned income is an offence that affects many different types of firms, not just those in the accountancy sector. It could be the movement of funds through a bureau de change, the encashment of a business cheque, or the spending of cash through a high net worth dealer.
The risks to regulated firms from criminal activity can be common across each sector and be equally relevant to all.