Money laundering and the law

Breaching the terms of the Money Laundering Regulations 2007 could result in a heavy fine and even imprisonment.

What is money laundering?

Money laundering is the criminal act of concealing the original source of illegally obtained money, so that it appears 'clean', or legitimate - hence the term laundering.

It's estimated to cost every household in the UK £255 a year and allows criminals to profit from their crimes.

Criminals do this by making such proceeds appear as though they came from a valid source, such as: 

  • The act of laundering itself - introducing the money into circulation so that it appears legitimate. This could be through banks, shops, casinos etc.
  • Moving the money around using multiple complex transactions, until the origins cannot be traced.

What is the penalty for money laundering?

The UK has some of the toughest money laundering laws in the world. Under the Proceeds of Crime Act 2002, this offence can result in a maximum sentence of 14 years in prison. It could also mean restraint and confiscation proceedings.

What can I do to prevent money laundering within my organisation?

If your business is covered by the Money Laundering Regulations, you must put certain controls in place to prevent your business from these practices and prevent money laundering. These include:

  • Assessing the risk that your business will be used to launder money.
  • Checking (and sometimes) verifying the identities of your customers.
  • Verifying the identity of ‘beneficial owners’ of corporate entities and partnerships.
  • Observing your customers’ business activities and reporting them to the National Crime Agency (NCA) when suspicions arise.
  • Ensuring you have the proper prevention controls in place.
  • Retaining all documents relating to financial dealings, the identities of your customers, management procedures, and risk assessments.
  • Ensuring that all employees are aware of the regulations and are trained to deal with the issues involved.

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How can my employees report suspicious activity?

If your company operates under the Money Laundering Regulations, you must appoint a nominated officer as part of the controls that you are obliged by law to put in place. You don’t need to do this if your business doesn’t have any employees. If this is the case, then you are directly responsible for informing the NCA yourself.

Once you, or your nominated officer, suspect that money laundering is taking place, you must inform the NCA immediately.

My organisation is being investigated for money laundering – what should I do?

It is vital that you seek professional advice immediately.

First4Lawyers can act for professionals who find themselves caught up in money laundering investigations whether as suspects or witnesses. Our experts are here to provide specialist advice on the steps you can take to reduce the impact of such an investigation.

To protect your interests and those of your business from the legal effects of money laundering, get in touch with our legal advisors, who will review your case for free.

Need a hand? First4Lawyers will...

  • Review your legal requirements for free
  • Recommend the most appropriate action based on your personal needs
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