Business Management zone

Money Laundering Regulations 2007 - how to deal with compliance backlogs

It is now more than six months since the Money Laundering Regulations 2007 became law and any unofficial grace period from the authorities is well and truly over. Yet there remains a significant number of regulated businesses that have not managed to put their compliance house in order.

Given the administrative burdens posed by the new law this is perhaps not surprising. But even some of the UK's largest firms are currently facing a sizeable backlog of compliance checks, as far back as 15 December last year when the Government's stringent new anti-money laundering regulations became law.

Ed Balls, Economic Secretary to the Treasury at the time the government first announced its AML plans in January 2007, made it clear that the aim of these "tough and targeted" measures was to "crack down further on illegal activity and help force criminals and would-be terrorists out of the shadows."

According to the Treasury’s analysis around 100,000 UK businesses are affected by the law, including external accountants, auditors, tax advisors, company formation agents, financial institutions, law firms and dealers in high value goods – essentially any business that might carry out a cash transaction greater than €15,000.

Of course for some larger organisations the credit crunch and current economic uncertainty has exacerbated the problem; departments' resources and staff, including in risk and compliance, are being squeezed. There are concerns that firms, particularly in the accountancy sector, will cut so far back that they simply no longer have the people required to do the compliance job properly.

What is perhaps more worrying, however, is the large number of UK businesses that are simply not aware that they need to comply and the even larger number that are oblivious to the risks they are incurring by not complying. Have they considered, for example, that police investigating a money laundering case in, say, five years time, will be at liberty to trace any AML regulated business or individual that has transacted with a suspected individual or business since 15th December 2007? Or, that they have the right to demand to see records of the anti-money laundering checks carried out at the time? Non-compliance leaves businesses open to large fines and even personal prosecutions.

If you are reading this and feeling a twinge of recognition, now really is the time to do something.