On 21 April 2016, HM Treasury and the Home Office published the government’s “Action Plan” on the prevention of money laundering and the funding of terrorism.   The Action Plan is designed to help businesses to help the UK in the fight against money laundering and financing terrorism – an issue which is becoming all too important and relevant at this time.

The threat

The Action Plan describes the most significant money laundering and terrorist financing threats in the UK, which include the following:

• “High end money laundering” of funds through or into the UK, linked to grand corruption and major fraud.

• Professional firms (financial, legal, accountancy and related service sectors) in the UK which inadvertently enable criminal funds to be laundered into/through/out of the UK.

• Laundering of proceeds from major crimes such as modern slavery and organised immigration crime.

• Abuse of the charitable sector (raising and moving of funds) for terrorism purposes.

The Action Plan aims to give a snapshot of the size of the issue in the UK – describing how some £199 million in assets were recovered from criminals in the UK in 2014/2015.

The Action Plan describes the UK as the “largest centre for cross-border banking”, responsible for some 17% of the total global value of bank lending.   This, coupled with the size of the professional services and financial sector in the UK, and the appeal of the London property market to overseas investors, gives the UK an unusually high level of exposure to the money laundering risk.

The aim

The November 2015 National Security Strategy Review (NSS) and Strategic Defence and Security Review (SDSR) identified terrorism and serious and organised crime as “Tier One” and “Tier Two” national security threats.  As such, the main aim of the Action Plan is to make the UK a more hostile place for criminals and/or terrorists, who are seeking to use the UK as a vehicle in which to move, hide, or use, the proceeds of crime or corruption.  One of the ways in which the Action Plan is seeking to achieve this is through a more effective public/private sector partnership – more information is to be shared between law enforcement agencies and the private sector, who will be working towards the joint aim of disrupting terrorists and criminals.  This more effective partnership should underpin the priorities set out in the Action Plan, which are discussed below.

Priorities

The priorities set out in the Action Plan can be summarised as follows:

• Enhanced law enforcement response to threats to the UK – i.e. new capabilities for law enforcement agencies and the creation of tough legal powers to enable “the relentless disruption of criminals and terrorists”.

• Supervisory regime reform – to ensure that the regime is consistent and effective, and makes UK companies who do facilitate money laundering accountable for that action. This is part of a “risk based approach” to money laundering and terrorist financing, which will be required when the 4^th Anti-Money Laundering Directive is transposed in the UK by June 2017.

• International reach of law enforcement agencies and international information sharing (for example, working alongside organisations such as G20) – enabling the UK to better tackle terrorist financing and money laundering threats.

Consultation

The Government is seeking the views of big businesses, professional services firms and law enforcement bodies on measures considered as part of the Action Plan, which include:

• Creation of new powers, such as “Unexplained Wealth Orders”, which would require those suspected of money laundering to declare their wealth.

• A linked forfeiture power to be used when answers are unsatisfactory or where the recipient of an Unexplained Wealth Order fails to provide a response.

• Reform of the Suspicious Activity Reporting regime, which requires people in the regulated sector to report money laundering suspicions to the National Crime Agency.

• Creation of an “illicit enrichment offence”, to be used when a public official has an unexplained and significant increase in assets.

• Power for money in bank accounts to be quickly seized and forfeited.

• New administrative powers to label an entity as being of specific concern, which will have the result of requiring the regulated sector to take special measures in dealings with that entity.

• Options for reform of the current system of “anti-money laundering, counter-terrorist finance supervision” to ensure that supervisors are consistent, accountable and provide businesses with the requisite level of support.

Responses are sought by 2 June 2016 and are encouraged – all UK businesses and professional services firms have a part to play in tackling the issue of terrorist financing and money laundering in the UK.  The hope is that the greater the participation of business in the consultation, the more robust and united the UK’s approach to these issues will be.

Electronic responses to the consultation can be sent to ami@hmtreasury.gsi.gov.uk.

A link to the full action plan can be found here: https://www.gov.uk/government/publications/action-plan-for-anti-money-laundering-and-counter-terrorist-finance