A recent report published by Transparency International UK revealed some serious concerns in UK's AML rules which serves as an excellent food-for-thought read for the rest of us in Asia.
"Radical overhaul of the UK’s anti-money laundering system is needed, if the UK is to close the door to the billions of pounds in corrupt money coming into the country every year, according to a new report by Transparency International UK (TI-UK).
A system not fit for purpose:
Poor oversight – The majority of sectors covered in this research are performing very badly in terms of identifying and reporting money laundering. Major problems have been identified in the quality, as well as the quantity, of reports coming out of the legal, accountancy and estate agency sectors. One supervisor even admitted it carried out no targeted AML monitoring at all during 2013.
Lack of transparency – 20/22 supervisors fail to meet the standard of enforcement transparency demanded by the Macrory standards of effective regulation.
Ineffective sanctions – Low fines, in relation to the amounts being laundered, failing to be effective deterrents. Of the 7 HMRC regulated sectors, that includes estate agents, the total fines in 2014/15 amounted to just £768,000.
Independence questioned – Just 7/22 supervisors control for institutional conflicts of interest, whilst 15 are also lobby groups for the sectors they supervise.
The research highlights that:
A third of banks dismissed serious money laundering allegations without adequate review.
In the accountancy sector, at least 14 different supervisors have some responsibility – leading to widespread inconsistency and variations.
In property, only 179 cases deemed suspicious by estate agents in 2013/14.
Just 15 suspicious cases reported through art and auction houses."
An "interesting" report to mull over during this festive season and perhaps benchmark if your respective jurisdiction, regulatory standards and/or internal policies and procedures are up to the mark.
One conclusion from my perspective is that regulatory requirements in respect of AML/CFT will only get more complicated globally and demand more involvement/investment by intermediaries be it financial services providers or DNFBPs. Scratching the surface of doing the minimum, dodging the obvious and adopting the get-it-over-and-done-with attitude will get nowhere.