The imposition of a record £23.8 million fine on a money service business highlights the growing scrutiny being placed on compliance with UK anti-money laundering rules, an expert has said.
Andrew Sackey of Pinsent Masons, the law firm behind Out-Law, said the fine issued to Luton-based MT Global Ltd by HM Revenue & Customs (HMRC) is a warning to other regulated businesses that are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and should spur those organisations to review whether their policies, processes and practices comply with the regulations.
Sackey, who formerly headed the corporate criminal investigations unit in HMRC's Fraud Investigation Service (FIS), said: "A fine of this magnitude is huge – it is clearly intended to punish the money transfer company specifically, but also to send a crystal clear deterrent message across the sector. The money laundering regulations are not intended to be an unnecessary administrative burden. HMRC sees risk assessments, policies and controls as essential limbs of the first line of defence against the full range of financial crime, including in addressing the potential funding of terrorism and organised crime."
According to HMRC, MT Global was fined for "significant breaches" of the money laundering regulations over the period between July 2017 and December 2019. The breaches related to risk assessments and associated record-keeping, policies, controls and procedures, and "fundamental customer due diligence measures", it said.
Nick Sharp, deputy director of economic crime within FIS said: "Money laundering is not a victimless crime. Criminals use laundered cash to fund serious organised crime, from drug importation to child sexual exploitation, human trafficking and even terrorism. We’re here to help businesses protect themselves from those who would prey on their services. That includes taking action against the minority who fail to meet their legal obligations under the regulations as this record fine clearly shows."
Monitoring compliance with money laundering regulations is just one of the tasks falling on HMRC under its remit covering financial crime. Sackey said, though, that its partnerships with others help to identify risks and address non-compliance.
"HMRC's increasing focus on the supervision of the money laundering regulations demonstrates a far greater parity between its traditional focus on the enablers of financial fraud, which would include recent abuses of bounce back loans and deliberate furlough frauds, and the enablers of money laundering," Sackey said. "HMRC is not a lone voice in their mission to help businesses protect themselves from enabling criminality, whether carelessly or otherwise. Its work with other agencies and its increasingly important public-private collaboration with the banking sector via the Joint Money Laundering Intelligence Taskforce mean that there are many more eyes looking for the red flags of money laundering."
Out-Law News
12 Jan 2021