An officer and a target

I’m very familiar with the work of Money Laundering Reporting Officers, Money Laundering Compliance Officers, general compliance officers and police officers.  But I had never heard of Section 151 officers until a money laundering story of relevance to them popped up on one of the news feeds that I follow.  Section 151 refers to a part of the UK’s Local Government Act 1972 (now don’t all rush that link at once and crash the government website), and this section requires every local authority to appoint a suitably qualified officer responsible for the proper administration of its financial affairs – hence the Section 151 officer.  These people have their own dedicated online news and discussion forum called Room151, and it was here that a warning appeared in August (traditionally the silly season for government, but this warning is deadly serious).  In the wake of the NCA’s recent annual report, the Chartered Institute of Public Finance and Accountancy has been reminding its members that money laundering is a big deal, and that with the new powers introduced by the Criminal Finances Act 2017 (I assume here they are talking about UWOs), Section 151 officers should be vigilant.  As Marc McAuley, head of counter fraud services at CIPFA, put it: “Councils should put in place appropriate and proportionate AML safeguards.  Anyone who has enabled a transaction linked to money laundering could be liable – especially if the person behind the crime has been designated as a PEP.”

So, for those of us unfamiliar with the ways of local government, how could they be at risk?  Two suggestions offered by CIPFA are:

  • Signing rent contracts on housing properties where the landlord is running a front company to launder drug money
  • Organised crime groups could take on public sector contracts, thereby defrauding the government and also creating a legitimate-looking front for money laundering and other criminality (such as modern slavery offences).

Mr McAuley advises his readers: “Whilst local authorities are not directly covered by the requirements of the regulations, CIPFA would advise that councils should comply with the underlying spirit of the legislation.”

This is music to my ears.  I am more used to sectors trying to find ways out of their AML obligations – even sectors who are categorically included in those obligations.  But a sector that is not covered and still thinks it’s a good idea – well, I am delighted.  And of course it makes sense.  As we (quite correctly) make it harder for criminals to launder their money through the regulated sector, their wicked little thoughts are bound to turn to the unregulated sector.  To be frank, if you deal with money in any way, you can be sure that criminals somewhere are trying to devise a way to use you for laundering, so you might as well be ahead of the curve.

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

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