Financial crime is estimated to cost UK financial institutions around £5 billion a year. Money laundering underpins much criminal activity in the UK, providing the financial lifeblood of organised crime such as people trafficking and drugs.
Money laundering is a serious offence where criminals make it appear that money that has been illegally acquired is legitimate. It’s called money laundering because money that could be considered dirty is effectively being cleaned, enabling it to be used without suspicion.
Money laundering can have serious consequences for companies and national economies, costing businesses and taxpayers billions. Countries where large amounts of capital are being illegally laundered become less attractive to investors and riskier places in which to do business.
How does money laundering work?
Money laundering is facilitated through various means that often involve the abuse of legitimate processes and services.
One of the most commonly used methods is through the setting up of a company that appears to be legitimate, both within the UK and offshore. These are then used as a mechanism for laundering illegally obtained funds.
Property is another means through which criminals launder illicit finance. Property is obtained using illegally obtained funds which can then be sold at a later date giving those funds legitimacy.
Countries with significant financial centres, such as the City of London, are popular targets for laundering money. A range of professionals can find themselves criminally exploited via money laundering schemes. Accounting, legal services, financial advisors and estate agents may be unwittingly involved in money laundering, often through negligence. In some instances, they may be complicit or turning a blind eye to something that should be investigated.
Professionals may act as intermediaries facilitating the creation of complex structures that enable large amounts of money to be moved stored and concealed effectively.
The money laundering process
Money laundering will usually follow a three-step process but more complex schemes are often developed to further mask the laundering process.
The first stage of the process is when large sums of cash are physically deposited. This is the riskiest stage for the criminal as financial institutions should ask questions about the origins of the funds. They may place the money into a cash-only business, invest in property or exchange currency.
The next stage is to further hide the money from its original source by moving it around rapidly. It could be invested in a variety of financial products, moved into offshore accounts or invested in companies. The final stage is when the person who initiated the money laundering process will receive their money back in a legal capacity such as a property investment.
There are various points in this process when unsuspecting professionals and service providers may find themselves inadvertently caught up in illegal activity.
Anti Money Laundering Checks
Banks and financial institutions are required to carry out a range of checks before they accept money from customers, particularly when handling the transfer of significant amounts of money. Companies should conduct identification checks to ensure that any potential investor is who they say they are. This might include checking the details of the investor on the electoral register but may also include checks of documentation such as passports and bank statements.
Anti money laundering checks appear as a soft search on credit reports. Individuals will most commonly encounter anti money laundering checks when buying or selling property.
What is the punishment for money laundering?
Anyone found guilty of money laundering under the Proceeds of Crime Act 2002 can receive a jail sentence of up to 14 years or a substantial fine. The extent of the sentence will depend on the amount of money that has been laundered, with larger sums receiving longer sentences. The laundering of drug money will typically result in a higher sentence. The cash itself will usually be subject to a confiscation order.
Expert Legal Advice on Money Laundering Cases
If you or your company is being investigated for money laundering it’s important that you seek experienced legal advice as soon as possible. This is a complex area of law that needs careful handling to achieve the best outcome for the client.
At Mandla Bhomra, we have extensive experience in handling money laundering cases and can provide confidential advice and representation.
Contact us today for confidential advice.