Partner Richard Cannon comments on money laundering in Financial Accountant

Partner Richard Cannon comments on the NCA’s recent seizure of gold bullion and artwork from a convicted money launderer, and discusses how accountants can play a key role in combating money laundering.

Richard’s comments were published in Financial Accountant, 25 June 2024, and can be found here.

“A suspicious activity report (SAR) is required when, during the course of their business in a regulated sector, a relevant employee has knowledge and/or suspicion and/or grounds to know or suspect of money laundering or terrorist financing. The SAR should be made by an accountant or finance team as soon as the requisite knowledge or suspicion or grounds arise.

“In practice, the test for suspicion (as set out in the case of R v Da Silva) is relatively low, and would include a person ‘who thought that there was a possibility, which was more than fanciful, that the other person was or had been engaged in or had benefited from criminal conduct’.

“With NCA guidance describing SARs as providing “valuable information on potential criminality” to law enforcement, the information gathered often provides the NCA with real time intelligence on money laundering activity and can be the first step in freezing and seizing the proceeds of crime. However, the large volume of SARs (with over 850,000 SAR’s made in the year to March 2023) means that the NCA often struggles to process the sheer amount of reports received.

“Due to concerns surrounding criminals using the art market to launder the proceeds of crime, the Money Laundering Regulations 2017 saw regulations tightened around the buying and selling of art. As of January 2020, art market participants who deal in the sale, purchase or storage of works of art with a value of over €10,000 have been subject to strict anti-money laundering obligations, under such regulations.

“Crucial to this is the requirement to operate a series of anti-money laundering (AML) policies and risk assessments to identify and reduce risk in transactions, with the requirement to identify the physical person or the controller of the corporate entity concerned and then carry out a risk assessment. Those in the regulated sector will be familiar with the customer due diligence (CDD) requirements involved.

“These policies can therefore be vital in identifying potential criminal activity in a transaction, and protecting either the buyer or seller in such cases.”