Money laundering is the process of disguising illegally gained funds and integrating it into legitimate financial systems. Up to £100 billion is suspected to be laundered through the UK every year. The proceeds from this criminal activity have a far-reaching and damaging impact, financing criminal activity including sex trafficking and terrorism. Organised crime groups and corrupt elites launder the proceeds of crime to fund lavish lifestyles and reinvest in criminality. So, when people say money laundering is a 'victimless crime' that is patently not true.
Whilst the Government and crime-fighting agencies are stepping up efforts to tackle money laundering, businesses have an important hand to play too. Those operating in the accountancy, legal and property industries are particularly exposed to the practice of money laundering and need to vigilant and are legally obliged to report suspicious activity. "It’s virtually impossible to launder money without banks, lawyers and accountants involved," says Jeffrey Davidson, managing director of Honeycomb Forensic Accounting. "Because we manage people’s money through client accounts or through doing their books, people are able to use accountants unwittingly.”
However, the onus is not just on accountants and legal professionals to be wary of money laundering. Any business can unwittingly play a role in laundering dirty money. In a recent example, overseas fraudsters were using investments in UK startup companies to disguise proceeds from crime. Business owners can be convicted even in cases where they were tricked or simply unaware. That's why it's so important to familiarise yourself with money laundering red flags and safeguard against the risk by conducting proper due diligence on new and existing clients.
Here are the ten red flags identified by Flag it Up that you should be looking out for.
For additional information about the ‘Flag it Up’ campaign, or more advice on how to tackle money laundering, please visit FlagItUp.campaign.gov.uk
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