Complacency within UK businesses could drive money laundering risks

16-May-2019

 
Over two thirds (68%) of UK businesses think enough is being done to tackle the country’s dirty money problem, despite recent money laundering scandals sweeping the EU and numerous regulatory crackdowns, according to new research released today by LexisNexis® Risk Solutions, the global analytics provider. 

LexisNexis Risk Solutions worked with the Economist Intelligence Unit to survey a range of senior compliance, finance and legal executives from the banking, fintech, legal, real estate, and gambling sectors for its ‘On the Frontline: The UK’s Fight Against Money Laundering’ report, with a view to understanding current attitudes towards money laundering and AML provisions across UK businesses. 

Surprisingly, despite the National Crime Agency estimating that over £100bn of illicit funds impact the UK each year, only a third (33%) of respondents feel that not enough is being done to fight the UK’s money laundering problem. Also of concern is that over half (57%) believe that the regulatory framework is effective in driving businesses to tackle the issue. 
  
Are some sectors higher risk than others?
 
According to the report, the gaming sector and high value vendors (businesses who accept or make payments of over €10,000) were perceived to be the most appealing for criminals looking to launder money, (15% and 12% respectively). The legal sector (4%) and estate agents (6%), were perceived as being at the lowest risk. This is despite recent increased pressure and penalties from regulatory bodies such as HMRC and the Solicitors Regulation Authority (SRA) into their respective sectors. Almost three quarters of respondents (73%) also think that the regulations they have to comply with are proportionate for their sector, when compared with other non-regulated organisations. 
 
Looking to the future, almost a quarter (24%) agreed that evolving criminal methodologies were the single biggest risk in the fight against dirty money in the UK over the next 12 months. This is compounded by the fact that 41% are concerned that there is a lack of understanding of the different ways in which criminals launder money within their own organisations. The impact of geopolitical events is also a concern, according to the report. Almost a fifth (18%) of respondents think events like Brexit will be the largest risk to fighting future financial crime; this is likely as a result of concerns around less information sharing.
 
Steve Elliot, managing director at LexisNexis® Risk Solutions, comments:

“The report’s findings are undoubtedly concerning. Whilst there has been recent praise from FATF for the UK’s anti-money laundering efforts and a number of high-profile initiatives like the Economic Crime Strategic Board have been set up by Government to further help combat the issue, the financial crime environment is fast-changing, and so firms cannot be lulled into a false sense of security.
 
Recent laundromat scandals have showcased the damage of dirty money, and the ease with which it can move from one jurisdiction to another. With criminals getting more sophisticated in their means, we continually need to up the ante in our fight. Only by working together and utilising the best tools available will we be able to stop money launderers in their tracks. There simply is no room for complacency.”
 
Renée Friedman, managing editor at the Economist Intelligence Unit, adds:
 
"With criminal methodologies evolving so rapidly, the need for stronger regulatory guidance and better information sharing between regulated businesses is paramount. Compliance teams, if they are to be fully motivated to engage in more than just box ticking exercises, require timely and sufficient feedback on enforcement outcomes."