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The Future of Money Laundering After Brexit

14
Feb
2019
Vishal Marria
CEO

With a no-deal Brexit on the horizon, fears surrounding the security of the U.K. are ever-increasing. The U.K. will become a target for money-laundering activity, so businesses must ensure that they are extra vigilant and prepared with efficient monitoring systems to spot and prevent suspicious activity.

With Brexit fast approaching, there are growing worries surrounding the U.K.’s financial and economic well-being after leaving the safety blanket of the European Union. Among fears of the U.K. heading towards economic turmoil, we must also consider the real threat of rising risk in the financial crime space – money laundering, in particular.

Money laundering is critical to funding criminal activity. As money often provides the main source of motivation for crooks, this leads to a rise in further illicit behavior as the ill-gotten gains need to launder before they are used. As criminals find new money-laundering opportunities, this enables harmful activity to occur, including drug and human trafficking and terrorist financing. The threat of money laundering doesn’t simply impact the U.K. on an economic level, but we also have a moral obligation to prevent illicit activity that could harm innocent people.

The National Crime Agency predicts that money-laundering opportunities will increase following Brexit, as criminals are ultimately attracted to weakness. The uncertainty surrounding the U.K.’s future outside of the EU is a weakness awaiting exploitation. When the day arrives for the U.K. to leave the EU, the government needs to protect our financial safety.

A collective effort

At present, the U.K. is part of a collaborative fight against money laundering and financial crime. One of the main benefits of this is that EU member states can trace suspicious money across borders. This is achieved through access to the Europol Information System (EIS), enabling law enforcement from different countries within the EU to exchange criminal intelligence, making it much harder for the criminals to cover their tracks.

We have a moral obligation to prevent illicit activity that could harm innocent people.

After Brexit, the U.K. will be isolated from this intelligence sharing practice. However, that is not to say anti-money-laundering (AML) best practices can’t still be shared with the right agreements put in place. The U.K. government must ensure the highest standards of financial crime defenses and sustain the importance of implementing effective AML systems.

Making progress

Last year, we saw fantastic developments in the fight against financial crime with the introduction of the EU’s 5th Money Laundering Directive. This regulation establishes a centralized public register of companies and their Ultimate Beneficiary Owners (UBOs)This collaboration of data reduces the number of shell companies in an attempt to prevent illicit behavior by making businesses more transparent. The NCA also introduced the Unexplained Wealth Order, which requires that any purchaser of an item costing over £50,000 demonstrate how they were able to afford this purchase. Again, this forces transparency that makes it difficult for criminals to continue to benefit from their crimes.

It is fundamental that the U.K. government ensure that corruption doesn’t worsen with the adoption of similar practices. Regulations like these will help to provide some stability through the imminent post-Brexit chaos.

The future of the U.K.

With a no-deal Brexit on the horizon, fears surrounding the security of the U.K. are ever-increasing. The U.K. will become a target for money-laundering activity, so businesses must ensure that they are extra vigilant and prepared with efficient monitoring systems to spot and prevent suspicious activity. On a higher level, the U.K. should look to settle data-sharing agreements, which would benefit the safety and security of all EU countries by continuing access to a shared intelligence database. The future of the U.K. is unclear, but one thing is for certain – the fight against financial crime is going to become tougher and we need to collectively be prepared.

 

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