A welcome mat for money launderers

For some months, a Home Affairs Select Committee of the UK parliament, under the chairmanship of Keith Vaz MP, has been taking evidence about the effectiveness of the UK’s proceeds of crime regime.  It has not been a happy story, as you can imagine.  In short, it seems that the spirit is willing but the flesh is weak, as some of the key statistics reveal:

  • 640,000 offenders were convicted of a crime in the UK in 2014-15, over which period 5,924 confiscation orders were made – meaning that less than 1% of convictions led to a confiscation order
  • The overall enforcement rate of all confiscation orders was 45% – and this varied with the size of the confiscation order (e.g. 96% of orders up to £1,000, and 22% of orders above £1 million)
  • At September 2015, there was £1.61 billion total debt outstanding from confiscation orders (30% of which is interest)
  • It is estimated that at least £100 billion is laundered through the UK every year
  • By the end of October 2015, the National Crime Agency had closed 119 suspicious bank accounts in the UK.

There is a great deal of meat in the committee’s final report (and it is well worth reading – at least the “Conclusions and recommendations” section), but focusing on the money laundering elements of it, they reserve much of their ire for the UK property sector: “It is astonishing that just 335 out of some 1.2 million property transactions last year were deemed to be suspicious.  This suggests to us that supervision of the property market is totally inadequate, and that poor enforcement has laid out a welcome mat for money launderers.  The recent policies announced by the Government must include enhanced supervision of the property market and both sides of the transaction – buyers and sellers – must be included.”  The report also recommends the extension of the AML regime to the property letting sector: “At the moment it is far too easy for someone intent on laundering money to buy a property with their ill-gotten gains, and rent it out in a very buoyant and robust letting market, and take in clean money in perpetuity.  We recommend that, as with estate agents and other professional services, letting agents must use the Suspicious Activity Reporting regime (SARs) system and undertake appropriate due diligence when taking on new clients.”

I have long campaigned (in that inimitable, nagging, pleading way of mine) for estate agents to take their AML obligations more seriously – you’d be amazed at the enquiries I sometimes receive from them, looking for ways to interpret the legislation so that the particular relationship they want to foster is excluded.  And it has also seemed daft that letting agents are not in the AML family: they provide a professional, money-based service to clients, so how are they so very different from accountants and TCSPs?  Of course, the committee’s recommendations will have to go to the back of the post-Brexit line – despite their frequent references to “returning to this issue next spring” – but we can only hope that the flesh is invigorated by their findings.

This entry was posted in AML, Legislation, Money laundering and tagged , , , , , , , , . Bookmark the permalink.

1 Response to A welcome mat for money launderers

  1. Pingback: Thrill-seekers and risk-takers | I hate money laundering

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.