Flag It Up

Money laundering is a dirty business.

Criminals employ a range of techniques to clean their “dirty money”. Professionals working in the accountancy, legal and property sectors are being targeted  because of their expert skills and services (National Risk Assessment 2017), which can give a cloak of legitimacy to illicit cash. This gives professionals a crucial role to play in protecting the UK’s economy, and wider society by reporting suspicious activity.

While money laundering isn’t always obvious, the consequences are severe.  Even accidental involvement in money laundering could mean losing your licence, receiving a fine, or facing criminal prosecution.  To tackle this threat, the UK Government is working with the accountancy, legal and property sectors through Flag It Up, to promote best practice in anti-money laundering compliance and reporting suspicious activity.

The scale and impact of money laundering is devastating.

Money laundering is the process by which the profits of illegal activities are disguised and made to appear legitimate. The National Crime Agency’s National Strategic Assessment of Serious and Organised Crime 2018 states that there is a realistic possibility that the scale of money laundering impacting the UK annually is in the hundreds of billions of pounds.

Money laundering is not only a crime itself, but also a key enabler of other serious crimes such as modern slavery, drugs trafficking, fraud, corruption, and even terrorism.

If you’re suspicious, Flag It Up!

If you suspect that money laundering may be taking place, you are legally obligated under the 2017 Money Laundering Regulations to submit a Suspicious Activity Report (SAR) to the National Crime Agency.  A high quality SAR can provide crucial intelligence for law enforcement and can help to prevent a wide range of serious and organised crime and terrorist activities.  Investigations are often based on multiple SARs, and your report could be the missing piece of the puzzle.

You can find further information on how to submit a SAR on the NCA’s website.

Know the signs, report the crime.

Here are some of the red flags of potential money laundering activity.  Although this list is not exhaustive, it contains some of the most common red flags across all professions.

You should make sure you are familiar with these indicators, and be on alert for them when dealing with both new and existing clients.

• Transactions: Are transactions unusual because of their size, frequency or the manner of their execution, in relation to the client’s known business type?
• Structures: Do activities involve complex or illogical business structures that make it unclear who is conducting a transaction or purchase?
• Assets: Does it appear that a client’s assets are inconsistent with their known legitimate income?
• Resources: Are a client’s funds made up of a disproportionate amount of private funding, bearer’s cheques or cash, in relation to their socioeconomic profile?
• Identity: Has a client taken steps to hide their identity, or is the beneficial owner difficult to identify?
• Behaviour: Is the client unusually anxious to complete a transaction or are they unable to justify why they need completion to be undertaken quickly?
• Political Status: Is the client engaged in unusual private business given that they hold a prominent public title or function? Or do they have ties to an individual of this nature?
• Documents: Are information or documents being withheld by the client or their representative, or do they appear to be falsified?
• Geographical Area: Is the collateral provided, such as property, located in a high-risk country, or are the client or parties to the transaction native to or resident in a high-risk country?
• Choice of Professional: Have you, or other professionals involved been instructed at a distance, asked to act outside of your usual speciality, or offered an unusually high fee?

The Financial Action Task Force (FATF) website has more information on potential indicators of money laundering, as well as up to date information on high-risk jurisdictions.

Further resources and guidance for professionals.

Anti-money laundering resources such as webinars on customer due diligence and SARs can be accessed via HMRC’s guidance page.

Accountancy professionals can access the Anti-Money Laundering Guidance for the Accountancy Sector, intended for all entities providing audit, accountancy, tax advisory, insolvency or related services such as trust and company services.

Legal professionals can access the Legal Sector Affinity Group’s Anti-Money Laundering guidance for all independent legal professionals and other staff in a law practice who are involved in anti-money laundering compliance.

Property professionals can access HMRC’s Money Laundering Regulations 2017 guidance and registration guide for estate agency businesses.

Campaign materials

You can download sector specific campaign materials and content via the links below:

• Accountancy
• Legal
• Property

You can also download our short guidance for submitting better quality Suspicious Activity Reports.

Further information

• Money Laundering Regulations 2017
• Criminal Finances Act  
• Serious Crime Bill: Proceeds of Crime Act
• The SARs Regime