Why the UK needs to reassess its anti-money laundering measures before it’s too late



Through Dr Henry Balani, Global Head of Industry and Regulatory Affairs for Encompass Corporation

The UK has seen calls for an overhaul of its anti-money laundering measures amid numerous reports of high-profile cases of financial crime, which continue to threaten the country’s reputation and security.

In reality, National media called the UK the “money laundering capital of the world for a post-Soviet Union elite” after evidence emerged that professional facilitators continued to offer foreign kleptocrats “a home in London”.

If this continues, the national security and integrity of the UK risks collapsing.

However, money laundering in the UK is a much more complicated problem than initially thought, and there are thousands of unique and complex relationships between UK financial professionals and international criminals which contribute to economics of money laundering.

Britain’s colonial ties to offshore tax havens in the Caribbean and beyond have been highlighted in the Pandora Papers Scandal. Nations such as the British Virgin Islands, Cayman Islands and Jersey, among others, have laws in their books that encourage the registration of offshore trusts as a business service that has now turned into instruments of tax evasion and money laundering for international criminals.

This is in part because, historically, London has been at the center of a vast physical empire that has now developed the nation into a financial power. In fact, London has often been cited as one of the world’s largest financial capitals, and the UK as a whole controls a significant portion of the banking industry in Europe. According to the European Union (EU), since 2016, half of the world’s financial companies have based their European headquarters in London. As a result, sectors such as accounting, banking, fintech law and real estate play a central role in the UK economy which has unfortunately resulted in some damaging financial activity.

Acknowledging the fact that historic colonial ties still exist is important, and the challenge this presents is that crooks have taken advantage of Britain’s network of offshore tax havens, sometimes at the expense, or worse yet, in complicity with these London-based financiers. . professionals.

A major example such actions have been observed through the Ahsani family’s company, Unaoil, laundering money through a chain of offshore companies which have assisted in the purchase of a number of properties in the UK to hide illicit funds. Reported proceeds of £ 7.5million were transferred through these offshore companies alongside funds from outside investors into investment funds.

Another example of money laundering in the UK property market came from the family of Kenyan President Uhuru Kenayatta. According to the Pandora Papers, they allegedly owned a series of offshore companies in Panama and the British Virgin Islands. 7 members of the Kenayatta family were variously linked to 11 offshore companies and foundations.

Perhaps most alarmingly, the Pandora Papers revealed that family members used their offshore companies to purchase three properties in the UK. One of them was an apartment in London, near Westminster, which was rented to an unconscious MP until the summer of 2021.

According to the National Crime Agency (NCA): “Virtually all high-end money laundering programs, and many in cash, are facilitated by the abuse of legitimate processes and services,” suggesting that the small majority of financial professionals involved in money laundering pose a serious threat.

However, we have already seen some level of money laundering enforcement action taken by the NCA. For example, a family sold their London homes worth £ 1.6million, bought in part through money laundering investments. The NCA’s civilian recovery request linked the purchases to a suspicion of money laundering, with the mother eventually finding cleanup money for an Albanian drug gang.

The discovery of millions of pounds in UK property, linked to high-profile money laundering scandals, only heightens concerns about Britain’s international reputation and financial integrity.

The Covid-19 pandemic and lockdowns certainly didn’t improve the situation, as digital identity authentication and paperless transactions, for example, made it easier for some financial criminals to slip through the cracks. the net of less sophisticated due diligence processes in the banking industry. .

Going forward, we should expect a tightening of restrictions from the regulator, as well as a proactive and cooperative effort by all private finance professionals and companies to ensure that this form of financial activity does not continue. not without control. The UK’s reputation as a safe place to do business for legitimate companies depends on it, as there are other financial centers around the world too happy to take the lead.

The adoption of sophisticated Know Your Customer (KYC) technology is imperative to improve the effectiveness and efficiency of regulatory processes. Reports of suspicious activity will continue to play a key role in identifying unusual behavior or activity of concern, provided finance professionals file actionable, not purely defensive, reports.

In addition, the overhaul of the country’s anti-money laundering measures, alongside the adoption of effective KYC technology, is essential to prevent further large-scale money laundering programs and protect reputation. and the future of the UK as a safe place to do business. Otherwise, expect other rival financial centers to pick up the baton.



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