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U.K. money laundering task force launched; watch out McMafia!

Paul Hodgson | November 13, 2018

Last week, the Minister of State for Security and Economic Crime, Ben Wallace, Member of Parliament (MP), formally launched a new partnership of agencies to fight economic crime known as the “National Economic Crime Centre” (NECC).

The initiative, announced in December last year, will crack down on all businesses with an initial focus on estate agents, responsible for allowing money laundering through high-value property purchases, high street solicitors, and accountants who, it is claimed, facilitate about £100 billion (U.S. $130 billion) of money laundering in the United Kingdom but are failing to report suspicious activity, public schools, football clubs and other sports teams, and luxury car garages. The regulatory bodies for these industries have also been contacted by the minister and told to beef up their monitoring protocols. The minister has pledged an additional £48 million (U.S. $62 million) to fund the agency.

The NECC is based at the National Crime Agency’s (NCA) London headquarters and includes officers from an alphabet soup of agencies: the NCA, HM Revenue and Customs (HMRC), the City of London Police, the Serious Fraud Office (SFO), the Financial Conduct Authority (FCA), the Crown Prosecution Service (CPS), and the Home Office.

In addition to these law enforcement agencies, the NECC also includes partners from elsewhere in the government and the private sector, including technology and communications companies and organisations such as U.K. Finance. It will not only make pursuing criminals defrauding U.K. industry and abusing U.K. financial services more effective, it will also embark on an education programme to teach industry and government agencies how to identify and prevent economic crime. “The NECC will identify and prioritise the most appropriate types of investigations—whether criminal, civil, or regulatory to ensure maximum impact,” said the press release announcing the NECC formation. It will also promote the use of new powers such as Unexplained Wealth Orders and Account Freezing Orders to tackle illicit finance.

Priorities for NECC

The government’s 6 priorities under the strategy are: 

  • reducing the insider threat in high-risk domestic sectors, such as borders and ports
  • reducing corruption in public procurement and grants
  • promoting integrity across the public and private sectors
  • strengthening the integrity of the United Kingdom as an international financial centre
  • improving the business environment globally
  • working with other countries to combat corruption

Source: Home Office

Wallace said the agency was designed to prevent criminals from enjoying the proceeds of their crimes. He also noted the newly updated Serious and Organised Crime Strategy, originally published in 2013. “This innovative centre of excellence will bring the full force of government, law enforcement, civil society, regulators, and the private sector to bear against those engaged in economic crime.”

In addition, the minister launched the ‘Flag It Up’ campaign a few days before the NECC announcement. Working with professional bodies, including the Central Association of Agricultural Valuers, the National Association of Estate Agents, and the Royal Institution of Chartered Surveyors, the government aims to help estate agents spot the signs of money laundering and reinforce their legal obligations to report suspicious activity.

In a recent speech, Wallace made reference to the BBC hit TV show McMafia. He said it was remarkable that “in all eight episodes not once did a character or criminal enterprise fear the police or financial regulators.” Organised crime uses lawyers, accountants, and estate agents to legitimise its ill-gotten gains, hiding them using the Internet and encryption. The estimated cost of serious and organised crime to society is at least £37 billion (U.S. $48 billion) each year. Attempts to increase detection of this kind of crime were also helped by the introduction, in 2017, of the Criminal Finances Act.

JMLIT AML successes

Between May 2016 and March 2017 (inclusive) the JMLIT has contributed to the following operational outcomes:

  • 63 arrests of individuals suspected of money laundering;
  • The instigation of more than 1,000 bank-led investigations into customers suspected of money laundering;
  • The identification of more than 2,000 accounts previously unknown to law enforcement;
  • The heightened monitoring by banks of more than 400 accounts;
  • The closure of more than 450 bank accounts suspected of being used for the purposes of laundering criminal funds;
  • The restraint of £7 million (U.S. $9 million) of suspected criminal funds; and
  • The granting of in excess of 40 Proceeds of Crime Act orders

In addition, JMLIT has developed 19 alerts and one strategic assessment on money laundering typologies currently being used by criminals to launder their criminal proceeds through U.K. banks.

Source: JMLIT

In addition, the Joint Money Laundering Intelligence Taskforce (JMLIT) will be co-opted into the NECC. This taskforce already includes officers from most of the agencies involved in the NECC, but also includes individuals from private financial institutions—vetted from Barclays, BNP Paribas, Citigroup, Deutsche Bank, JP Morgan, HSBC, Lloyds, Metro Bank, Nationwide, Post Office, RBS, Santander, and Standard Chartered. Wallace noted a recent human trafficking case uncovered by the JMLIT through the identification of five additional bank accounts previously unknown by law enforcement. The investigation led to the main subject in Nigeria being issued an 18-year custodial sentence; a second subject in the United Kingdom has now been charged for human trafficking and perverting the course of justice.

Further controls on money laundering will be introduced by a legislation that will enact a “world-leading register of overseas beneficial ownership of companies that own U.K. property.” In addition, by the end of this year, the government will set out reforms for limited partnerships, including Scottish Limited Partnerships, business structures which have been exploited by overseas criminals for money laundering.

Another government agency, the Joint Fraud Taskforce, is responsible for implementing the Banking Protocol, through which bank staff are trained to recognise signs of fraud at the branch level. Adoption of the protocol by police forces in England and Wales has already stopped £21.5 million (U.S. $28 million) in fraud losses and led to 180 arrests. In tandem, the government introduced the Take 5 initiative, a joint public-private education campaign aimed to help potential victims spot the signs of fraud.

With this abundance of fraud-fighting initiatives, it seems Wallace aims to negate the storyline in McMafia and put the fear back in criminal enterprises.