Britain’s National Crime Agency (NCA) is crying foul over the way some financial institutions appear to be dumping their AML due diligence requirements onto the NCA in the form of consent requests. Consent requests, according to a report this week in the Financial Times, are requests made by financial institutions to the NCA to pre-approve risky transactions, which results in the NCA having to turn around due diligence to the institution within a seven-day window. In effect, the NCA completes the due diligence rather than the institution.
Nigel Kirby of the NCA warned of the dumping of due diligence on the NCA and of the burden of NCA staff having to turn around the due diligence within seven days. He also noted that he expects this practice to become more widespread unless enforcement rules are changed to prevent such practices.
Issues of money laundering, front companies, and criminal dollars flooding the London real-estate market have drawn renewed attention to financial crime and enforcement issues in the U.K., and Prime Minister David Cameron has asserted repeatedly that his government will review existing rules such as the SAR processes.
According to the FT report, Transparency International is lobbying for the U.K. to put the onus for due diligence entirely on the financial institutions and end the practice of transferring the responsibility to the NCA through these consent requests.
Nick Maxwell of Transparency International asserts further that the 7-day turnaround for these requests make due diligence virtually impossible, and therefore highly suspect transactions are pre-approved with no risk to the institutions because the NCA simply cannot complete the investigation in that time period given the flood of requests.
The Home Office is expected to provide recommendations for improving this system and ending the resulting loopholes by the end of 2015.
