Transparency International UK has published a report entitled “Don’t’ Look, Won’t Find Weaknesses in the Supervision of the UK’s Anti-Money Laundering Rules” which concludes that the UK’s anti-money laundering (AML) system requires a radical overhaul to prevent corrupt money from entering the UK.

Overall, the report identifies that the current supervisory system is not fit for purposes due to the following four factors:

• poor oversight – problems were identified in both the identifying and reporting of money-laundering in the majority of sectors observed and in the quality of the reports from the legal, accountancy and estate agency sectors. One supervisor carried out no AML monitoring at all during 2013;
• lack of transparency – 20 out of 22 supervisors failed to meet high standards of enforcement transparency;
• ineffective sanctions – current levels of fining are too low to serve as an effective deterrent. Of the seven HM Revenue & Customs regulated sectors, the total fines in 2014/15 amounted to £768,000; and
• independence – many private sector supervisors maintain serious conflicts of interest by being both lobbying and promotional bodies for their sector and also enforcement authorities.

The report contains three key recommendations that the UK Government

• overhauls the way AML standards are overseen to achieve consistency, integrity and accountability in the supervisory system;
• ensures adequate levels of enforcement against money laundering; and
• provides better information about money laundering risks to the private sector.

As regards the financial services sector, the report considers the transparency and supervision by the FCA to be the strongest of all UK AML supervisors. The report refers to the strength of suspicious activity reporting and the “significant” sanctions which have been levied in response to money laundering failings. However, the report does raise concerns that not all illicit proceeds are identified through the sector, including from politically-exposed persons and high net worth individuals.

Copies of the webpage http://bit.ly/1NN2APy

and the report   http://bit.ly/1Q0O256