Zero Prosecutions Made Using Stricter AML Rules

The UK National Crime Agency and the Home Office have been under immense scrutiny in recent months regarding their perceived inaction concerning new anti-money laundering regulations that were introduced in June 2017.

Since that time, there have been no prosecutions made, according to a recent Freedom of Information request (FoI).

The FoI request, made by law firm Eversheds Sutherland, has found that between June 2017 and October 2018 there were no pending or outstanding prosecutions for potential AML breaches that may have led to the proliferation of terrorist financing or financial crimes.

Since the original Money Laundering Regulations were brought into force in 2007, there have only been 11 prosecutions. However, despite the significant push for financial institutions and the property sector to improve their processes and approaches, it is surprising that more isn’t being done to encourage companies to comply with regulations.

Following recent criticism toward the HMRC for their perceived neglect of estate agent responsibilities, whom they regulate, they have run a series of surprise visits of over 50 agencies suspected of trading without officially registering with HMRC; a clear breach under anti-money laundering (AML) regulations.

Amongst the largest businesses in breach of AML regulations was Countrywide who have amassed fines in excess of £215,000 and online agency, Tepilo, who were fined £68,595 following the unannounced visits.

The UK National Crime Agency have also started flexing their muscles in February by successfully imposing the first Account Freezing Orders (AFOs). Here, three UK bank accounts have been frozen with the possibility of a combined value of £400,000 being forfeited if investigations reveal evidence of AML.

Furthermore, In the past week, the National Economic Crime Centre (NECC) has indicated that they will advance the work of the NCA by imposing fresh AFOs on 95 additional UK bank accounts with a combined value of £3.6 million worth of finances being suspended and potentially forfeited.

Ruth Paley, lawyer at Eversheds Sutherland, said: “These statistics do not sit easily with the UK government’s assertion that it is successfully cracking down on economic crime and holding money launderers to account.

“It is estimated that the UK’s financial services sector is collectively spending £5 billion on core financial crime compliance measures. Compliance teams are continually warned about the dangers of failure to comply. Is it now time to be honest about the remote possibility of prosecution?”

Ben Wallace, Minister for National Security and Economic Crime, said: “Criminals who seek to use this country as a place to launder money should be in no doubt that they have nowhere to hide. Estate agents are a crucial line of defence against them and that’s why they’re under a legal – and moral – obligation to file a report when they spot something amiss.

“It’s wrong to think of money laundering as a victimless crime. Those with dirty cash to clean don’t just sit on it – they reinvest it in serious organised crime, from drug importation to child sexual exploitation, human trafficking and even terrorism.”

Whilst the NCA’s inactivity aimed at UK business regarding AML responsibilities may deter businesses from embracing their responsibilities and becoming serious in the fight against economic crime, the use of AFOs may act as a warning shot for individuals and crime organisations unable to explain their source of funds.

Should the Home Office and the NCA enforce more prosecutions for organisations failing to comply with AML regulations? Does more guidance need to be offered in order for AML regulations to be better understood?

Today's Conveyancer