Author: Nicola Sharp
23 May 2017
3 min read
With the rise of digital money laundering, the risk of a business getting caught up in such operations has never been higher.
According to the National Crime Agency’s National Strategic Assessment of Serious and Organised Crime, while public consciousness of the dangers of cyber-crime has vastly improved, the danger and impact of high-end money-laundering threats persists.
The report offers no confirmed figures about the scale of money laundering, but it is estimated that the amount of money laundered would be between £36 billion and £90 billion.
In addition to facilitating most types of criminal activity, money laundering causes untold damage to UK businesses.
It’s not just the financial price that affected businesses pay – often their reputation will be damaged beyond repair.
Here at Rahman Ravelli we have the resources and expertise to handle such high-profile cases by providing robust and innovative legal defence.
Money laundering has dominated the financial headlines in recent months with news that the UK aims to tighten defences against emerging techniques.
The creation of a new watchdog has been proposed to identify and resolve any potential weaknesses that could be exploited by criminal networks and terrorists.
The new Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is thought to have been set up in light of a UK bank’s involvement in a Russian scam. The four-year scheme involved the processing of an estimated £65 billion.
With further news that top UK banks have been involved in the international Laundromat money-laundering scheme, more questions are being asked about how senior figures in the financial sector can protect themselves and the organisations they work for.
While traditional methods of money laundering still pose a threat, new money laundering risks have become more significant. Online banking, electronic cash, e-gold, pre-paid phone cards and proprietary systems used in the transfer of rights owned and patented are now providing new routes and possibilities for launderers.
Technology companies are becoming unlikely victims of money laundering. Recently, two US-based tech companies were deceived by a phishing scam. More than $100 million was wired to several bank accounts in Lithuania, Latvia, Cyprus, Slovakia, Hungary and Hong Kong as part of the scam.
The alternative payment systems utilised in these new money-laundering practices are of particular concern. Virtual or digital currencies, such as Bitcoin and Ethereum, have been increasingly used for laundering.
An attractive option for criminals, Bitcoin can now be used for internet shopping while the owner remains untraceable. The age of digital currencies means that digital money-laundering practices are presenting major risks to companies, and as technology advances so do criminals and their techniques.
You can take various steps as a business to protect yourself from the threat of money laundering:
Implement processes to educate employees on the red flags associated with money laundering. An unwillingness to provide information, providing information that is deemed incomplete or inconsistent, the presence of unusual money transfers, and the use of complex group structures are all warning signs of money laundering.
Senior employees can also be appointed to examine funding sources for particular deals or investments.
Carry out customer due diligence to establish the identity of the client, partner or any other party involved.
The same practices should be used to identify the real beneficiaries of the transaction.
Introduce internal controls and complete a policy statement for your company. There are various accounting and cash handling processes your business can introduce to make it difficult to launder money, even with the new digital threats emerging.
No-cash policies are also useful when handling transactions of a particular size.
Enhanced due diligence should be carried out in situations where a country or financial corridor is deemed high risk.
The HM Treasury and Office of Financial Sanctions’ financial sanctions: consolidated list of targets guidance makes for essential reading when processing transmissions to high-risk countries.
Knowing the risks of money laundering, particularly in regard to the latest digital techniques, is a vital defence when protecting your business from such threats.
For further information about money laundering and our serious fraud services, please visit our money laundering page.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.