Money laundering is a financial crime. It involves taking proceeds that have been obtained from a criminal source (also known as ‘dirty money’) and disguising its origins so that it appears to have been acquired legitimately.
The process underpins and enables most forms of organised crime, allowing criminal organisations to further their operations and conceal their assets. Although there are no exact figures, the National Crime Agency believes that the scale of money laundering in the UK annually runs into the hundreds of billions of pounds.
Money laundering allows criminals such as drug gangs and human traffickers to expand and benefit from their operations. Examples of money laundering offences include tax evasion, theft, fraud, bribery, corruption, smuggling, modern slavery, human trafficking, drug trafficking and illegal arms sales.
An Overview of What AML Is
Governments across the world are keen to clamp down on money laundering to stop the funding of such criminal activities. In their attempts to do so, each country has developed its own Anti-Money Laundering (AML) rules and regulations that financial institutions and certain other businesses need to comply with. The UK has various laws that cover Anti-Money Laundering, and companies are legally required to perform specific tasks to actively monitor for and report suspicious activities.
In the UK, certain businesses and individuals must register with a particular supervisory authority to follow AML regulations. The regulations apply to:
- Financial and credit businesses.
- Independent legal professionals.
- Accountants, tax advisers, auditors and insolvency practitioners.
- Trust and company service providers.
- Estate agency businesses.
- Letting agency businesses.
- High-value dealers (handling cash payments of €10,000 or more in exchange for goods).
- Art market participants (buying, selling or storing art worth €10,000 or more).
Firms that operate in these areas must register with the relevant professional body that regulates their industry sector to find out what records they need to keep and what checks they need to make on their business and customers to prevent money laundering.
In some situations, businesses may also need to register with HM Revenue & Customs (HMRC).
You can find the full list of businesses and their respective supervisory bodies on the UK Government’s website by clicking here.
AML Requirements for UK Businesses
Businesses that fall under AML regulations must meet certain day-to-day responsibilities and put in place particular internal controls and monitoring systems, such as carrying out customer due diligence measures to check that customers are who they say they are and undertaking various risk assessments.
The precise nature of what you need to do depends on the size and complexity of your business, including the number of customers you have and the number and type of products and services you provide. For more information about what the process involves, click here to go to the UK Government’s website.
Key AML Regulations in the UK
AML requirements in the UK are based on several domestic and international laws. These include:
- The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). This outlines the additional obligations of private sector firms working in higher money laundering risk areas. It aims to stop criminals from using professional services to launder money by requiring professionals to take a risk-based approach.
- The Financial Services and Markets Act 2000 (FSMA) is the primary regulation for all financial services in the UK. It enacts the Financial Conduct Authority as the primary AML regulator and provides guidelines for its duties.
- The Proceeds of Crime Act 2002 outlines criminal offences and their penalties. It also obliges businesses to report suspicious activity.
Who regulates AML in the UK?
A variety of different law enforcement authorities regulate businesses in the UK. These include:
- The Financial Conduct Authority (FCA). This is the UK’s primary AML regulator. It mainly oversees banks and other firms in the financial services industry, but also has the authority to investigate money laundering offences across all industries.
- HM Revenue & Customs (HMRC), together with the Serious Fraud Office (SFO) and the National Crime Agency (NCA), enforce AML regulations in the UK. They also investigate financial crimes along with the FCA.
There are also industry-specific regulators, for example, the Gambling Commission, which oversees AML compliance in gambling businesses.
The Importance of AML Compliance
Companies have a moral and ethical obligation to ensure they are doing everything possible to adhere to AML rules to help prevent money laundering, terrorist financing, and fraud.
It is a criminal offence in the UK to fail to comply with obligations under AML legislation and non-compliance can result in various sanctions, significant reputational damage and heavy financial penalties. The UK Government publishes a full list of the fines the FCA hands out to non-compliant companies, which were reported in 2022 to total £215.8 million.
However, compliance is an art, and is not something that just happens. Businesses must plan and construct their approach to compliance and deliver this in a way that is easy to follow for staff, and that enables regulators to identify the business’s compliance infrastructure.
Compliance Services For Businesses
At AML & Compliance, we work with businesses to create compliance structures that simplify policies and procedures wherever possible and create environments where compliance integrates into the business rather than consumes it.
General Compliance – In addition to Anti-Money Laundering, we also work with businesses who are required to comply with:
- The Bribery Act 2010
- GDPR and Data Protection Act 2018
- Employment regulations
- Complaint management
- Internal investigations
- Codes of conduct
- Regulatory complaints and investigations
Our Expert Compliance Managers work across a range of sectors and regulators in the following sectors:
- Banks and Lenders
- Financial and Credit Businesses
- Accountants, tax advisers, auditors and insolvency practitioners
- Insurers and Brokers
- Trust and Company Service Providers
- Estate Agents and Letting Agencies
- High-Value Dealers
- Art market participants
- Solicitors – independent legal professionals
By understanding your business and your existing systems and processes, we document and implement any necessary changes to ensure you maintain a compliant business.
Our goal is to ensure our clients are not concerned about compliance and regulation, giving them the peace of mind in knowing that by working with AML & Compliance this will all be taken care of.
This enables the business owners and staff to focus on service or product delivery, generating income and managing their business effectively.
AML Solutions for UK Businesses
AML & Compliance is a cost-effective outsource solution that delivers an effective service for any business operating within a regulated sector.
Regardless of the size of your business, whether you are a start-up or an established business, AML & Compliance will work with you to deliver a successful compliance infrastructure.