Countries/Jurisdictions of Primary Concern - United Kingdom
The United Kingdom plays a leading role in European and world finance and remains attractive to money launderers because of the size, sophistication, and reputation of its financial markets. Observers feel the UK’s current regulatory architecture and the high degree of financial secrecy afforded to directors of British firms also are attractive to global criminal syndicates. Although narcotics are still a major source of illegal proceeds for money laundering, the proceeds of other offenses, such as financial fraud and the smuggling of people and goods, have become increasingly important. The past few years have seen an increase in the movement of cash via the non-bank financial system as banks and mainstream financial institutions have tightened their controls and increased their vigilance. Money exchanges; cash smugglers (into and out of the UK); and traditional gatekeepers, including lawyers and accountants, are used to move and launder criminal proceeds. Also on the rise are credit/debit card fraud, internet fraud, and the purchase of high-value assets to disguise illicit proceeds. Underground alternative remittance systems, such as hawala, are also common.
For additional information focusing on terrorist financing, please refer to the Department of State’s Country Reports on Terrorism, which can be found at: //2009-2017.state.gov/j/ct/rls/crt/
Do FINANCIAL INSTITUTIONs engage in currency transactions related to international narcotics trafficking that include significant amounts of US currency; currency derived from illegal sales in the U.S.; or illegal drug sales that otherwise significantly affect the U.S.: NO
criminalizATION OF money laundering:
“All serious crimes” approach or “list” approach to predicate crimes: All serious crimes
Are legal persons covered: criminally: YES civilly: YES
Know-your-customer (KYC) rules:
Enhanced due diligence procedures for PEPs: Foreign: YES Domestic: NO
KYC covered entities: Banks, credit unions, building societies, money service businesses, e-money issuers, and credit institutions; insurance companies; securities and investment service providers and firms; independent legal professionals, auditors, accountants, tax advisors, and insolvency practitioners; estate agents; casinos; high-value goods dealers; and trust or company service providers
Number of STRs received and time frame: 354,186: October 2013 – September 2014
Number of CTRs received and time frame: Not applicable
STR covered entities: Banks, credit unions, building societies, money service businesses, e-money issuers, and credit institutions; insurance companies; securities and investment service providers and firms; independent legal professionals, auditors, accountants, tax advisors, and insolvency practitioners; estate agents; casinos; high-value goods dealers; and trust or company service providers
money laundering criminal Prosecutions/convictions:
Prosecutions: 64: January 1 - September 30, 2014
Convictions: 56: January 1 - September 30, 2014
Records exchange mechanism:
With U.S.: MLAT: YES Other mechanism: YES
With other governments/jurisdictions: YES
The United Kingdom is a member of the FATF. Its most recent mutual evaluation can be found at: http://www.fatf-gafi.org/countries/u-z/unitedkingdom/documents/mutualevaluationofunitedkingdomofgreatbritainandnorthernireland.html
Enforcement and implementation issues and comments:
The United Kingdom has a comprehensive AML/CFT regime and is an active participant in multilateral efforts to counter transnational financial crimes. The UK reviews and assesses the effectiveness and proportionality of its AML/CFT regime, including through the approval of updated and more accessible industry guidance. A further revision of the Money Laundering Directive was published in February 2013 and is currently being negotiated at an EU-wide level.
The Financial Conduct Authority (FCA) is in charge of consumer protection and the integrity of the UK’s financial system. The FCA now has all financial crime responsibilities previously held by the British Financial Services Authority (FSA). The UK has worked to change and update its procedures to make compliance easier and more attractive under Her Majesty’s Revenue & Customs Anti-Money Laundering Supervision Change Program. HM Treasury continues to work with the Home Office regarding the National Risk Assessment to provide sector-related insights and expertise. On April 1, 2014, the FCA took over regulation of the consumer credit industry, supervising compliance of over 50,000 firms with legal and regulatory financial crime obligations. In 2013 and 2014, the FCA fined two separate major banks over $13 million for flaws in their AML controls.
There is no enhanced customer due diligence for British politically exposed persons (PEPs). The UK should consider changing its rules to ensure domestic PEPs are identified and, if appropriate, subject to increased due diligence requirements in accordance with international recommendations.
In 2014, a significant and wide reaching money laundering investigation was initiated in Moldova which involved an international web of companies, including a large number of UK firms. The complex scheme involved billions of dollars of tainted money primarily routed through Russia and layered through complicit British front companies.
The UK is continuing with plans to require beneficial ownership of companies and trusts to be listed in public registers. The measure is aimed at combating international money laundering and tax evasion.