In the UK, there has been a long-standing obligation to have effective procedures in place to detect and prevent money laundering. The UK Money Laundering Regulations, applying to financial institutions, date from 1993. The offence of money laundering was contained in various acts of parliament (such as the Criminal Justice Act 1988 and the Drug Trafficking Offences Act 1986).
The Proceeds of Crime Act 2002 (POCA) consolidated, updated and reformed the law relating to money laundering to include any dealing in criminal property. Specific obligations to combat terrorist financing were set out in the Terrorism Act 2000. Many of the procedures which will be appropriate to address these obligations are similar, and firms can often employ the same systems and controls to meet them.
The UK has an international commitment to anti-money laundering and the combating of the financing of terrorism and takes this obligation seriously. Money Laundering and Terrorism are global issues. What we see in the UK model reflects the joint response by those countries at “the top table” of international trade, those who are members of the Financial Action Task Force (FATF).
FATF now has 34 member countries; the latest member joining in 2009 was the Peoples Republic of Korea. FATF has issued 40 recommendations which provides for a comprehensive plan of action to fight money laundering and 9 special recommendations to combat terrorist financing. It is this framework that our Government uses in developing the UK strategy against money laundering and the financing of terrorism.
Some of the terminology being used under the regimes, such as ‘serious and organised criminals’, ‘terrorist financing’, a ‘Politically Exposed Person’ (PEP) can be not only daunting, but may seem confusing. . In some ways the requirements of the regime seems to be disproportional when it comes to policy and procedures for a small firm as compared to a very much larger financial institution, however, we have to understand that some risks are shared between all types of firms, whereas others may be peculiar to a specific sector.
Hopefully within our business we will never come across a major criminal. We still have to be aware though that criminal organisation’s can be structured just like any other business. They will have their own policy and procedures with their own management structure. They may have different departments including one that deals with the financial aspects of the organisation.
The one thing we can take for granted is that we will come across the lower ranks and street level workers of these organisations within our activities in the regulated sector, hopefully unwittingly.