U.K. proposes major changes to AML enforcement
David Cameron made the international rounds in prior years talking about the need for tougher stances on money laundering and terror financing—all while London became notorious for massive real-estate purchases with mystery money.
Cameron’s tough talk hadn’t amounted to much—but then the Panama Papers exposed his connection to an offshore investment fund, and now there is renewed public pressure for the U.K. to act on measures long under discussion.
Yesterday the British government announced an “action plan for money laundering and counter-terrorist finance.” Home Secretary Theresa May released a statement yesterday in which she acknowledged that Britain’s financial system is “at risk of being undermined by money laundering, illicit finance and the funding of terrorism. The laundering of proceeds of crime through UK institutions is not only a financial crime, it fuels political instability around the world, supports terrorists and extremism and poses a direct and immediate threat to our domestic security and our overseas interests.”
May said her government will focus on more and better enforcement and that the new plan will have a six-week consultation period focusing on reform of the U.K.’s SAR reporting system and the creation of “unexplained wealth orders” or UWOs. These UWOs would require anyone suspected of money laundering to declare truthfully the sources of their wealth and to face forfeiture if they decline to do so.
Another focus is on corrupt public officials who benefit from their positions. The new plan calls for “the creation of an illicit enrichment offense, for use when a public official has a significant and inexplicable increase in their assets.”
At the heart of these changes is a renewed focus on the possessors of ‘mystery wealth’ to declare and validate the source of that wealth. This move toward more up-front transparency aligns with public pressures in the U.S. and elsewhere in Europe to put the onus on the wealth holders to declare their identities and their sources of wealth in order to rule out money laundering, terror financing, and tax evasion.
This type of transparency would be a boon to financial institutions striving to maintain AML/CTF Compliance, but the resulting Compliance expectations and accountability would likely aggravate institutions willing to serve those intent upon obscuring their true identities and sources of wealth.
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