Government launches updated anti-money laundering strategy with a focus on the role of "professional enablers" such as lawyers, accountants and estate agents
On 1 November 2018, Minister for Security and Economic Crime, Ben Wallace, launched the Government's updated Serious and Organised Crime Strategy (originally released in October 2013) (the "Strategy"). To put the revised Strategy into force £48m of funding was promised to tackle economic crime and illicit finance. The National Economic Crime Centre, a specialist unit within the National Crime Agency ("NCA") with officers from the NCA, Serious Fraud Office, HMRC, and police forces, was launched on 5 November 2018 as part of this drive against money laundering and economic crime.
Director General of the NCA, Lynne Owens, said that crime cost the economy £37bn a year (up from £24bn in 2013). It is also estimated that the amount of money laundered through the country every year could be more than £90bn. The Government has already sought to tackle the laundering of dirty money through the Criminal Finances Act 2017 which brought in the ability to question those with assets it is suspected were obtained using illicitly gained wealth through Unexplained Wealth Orders (albeit only one has been successfully used to date). The Strategy sets out other ways of tackling this growing problem, by highlighting the role of what are referred to as "professional enablers" such as lawyers, accountants, and estate agents in facilitating money laundering, along with targeting of public schools, football clubs, and high value car dealerships to identify dirty money where it is being spent.
Professional enablers are described in the Strategy as a "crucial gateway" for criminals looking to disguise the origin of their funds and integrate them into the banking system. All regulated businesses are required to make Suspicious Activity Reports (SARs) to the NCA if they know about or suspect money laundering. Mr Wallace said that, although they still needed to do more, banks were responsible for 83% of SARs and were clearly willing to help in the crackdown against money laundering. By way of contrast, he singled out legal professionals as having submitted less than 1% of SARs in 2017 and needing to make more efforts to help in the fight against money laundering. The Strategy makes it clear that the Government views these professionals as key facilitators in the money laundering process whether as complicit, negligent or unwitting participants. Mr Wallace made it clear that there is going to be a drive to prosecute those facilitating money laundering as much as the criminals who are ultimately behind it. Professionals therefore need to step up their efforts or face sanctions, including criminal prosecution. Of course where professionals are complicit, or turn a blind eye, they should not be surprised if they are targeted by the authorities but it is how to protect against becoming unwittingly involved, in circumstances where presumably the professional is unaware of their involvement, that will cause most concern.
The Strategy sets out that a key priority will be to understand offending pathways for professional enablers due to the connection with illicit finance which underpins serious and organised crime. The Home Office is to undertake work with HM Treasury to better understand this and develop interventions for those at risk. The Strategy also states that the Government will work with professional associations in the legal and accountancy sectors to ensure any interventions meet the needs of their members. In an interview with the Guardian Mr Wallace stated that regulators had already been warned that unless they did more to root out illicit activity, their members would face closer scrutiny. It remains to be seen what this may mean in practice and whether there will be any change to the approach to know your client due diligence by those in the legal, accountancy and property sectors to make it more akin to that undertaken by banks. We will also have to wait and see whether any prosecutions of professionals for their role in enabling money laundering start to emerge.
For the full Serious and Organised Crime Strategy see: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752850/SOC-2018-web.pdf