Thu, Apr 9, 2015

A recently-announced joint initiative between the government, banks and law enforcement agencies could give those investigating suspected money laundering offences better oversight of suspicious accounts, an expert has said.

However, regulatory law expert Anne-Marie Ottaway of Pinsent Masons, the law firm behind Out-Law.com, said that the new intelligence-sharing initiative could increase the regulatory burdens on banks, which could find themselves pressured to raise suspicious activity reports in circumstances that would not previously have required action.

Established in February 2015, the Joint Money Laundering Intelligence Taskforce (JMLIT) will run as a pilot programme over the next 12 months. The initiative will involve representatives from the financial sector, National Crime Agency (NCA) and City of London Police gathering, exchanging and analysing information and intelligence on money laundering and other economic crimes. Information and intelligence will be processed and disseminated through the Financial Crime Alerts Service operated by banking body the British Bankers' Association (BBA).

'This is a significant new development for law enforcement's intelligence-gathering capabilities,' said Ottaway.

'Now the NCA and other law enforcement agencies will have the ability to identify bank accounts connected to their investigations that they would previously only have been aware of if a bank had submitted a suspicious activity report or it had been identified during the course of their investigation; for example, as a result of a funds tracing exercise. The ability of individuals and organisations to hide money in separate, seemingly unconnected, accounts will be greatly diminished as a result,' she said.

'However, for the banking sector this could lead to an increased anti-money laundering burden and a rise in the number of suspicious activity reports they must consider making where previously the activity on the account would not have triggered any suspicion,' she said.

The JMLIT was developed by the Home Office, NCA, City of London Police, BBA and financial institutions including Lloyds, Santander, HSBC, Nationwide, RBS, Barclays and the Post Office. It will consist of an operational information-sharing 'hub', made up of financial sector expects and law enforcement, which will work to tackle specific money laundering threats; a broader strategic group, administered by the BBA, which will 'horizon scan' for potential criminal threats; and the BBA's intelligence service.

The BBA's Financial Crime Alerts Service will get underway later this month and deliver 'critical intelligence' directly to UK-registered banks. It will provide real-time updates on terrorist financing, money laundering, bribery and corruption, cyber and e-crime and fraud threats, supplied by 12 participating agencies and government departments.

Serious and organised crime costs the UK economy an estimated £24 billion annually, according to government figures; with money laundering used to hide the true purpose of a 'significant proportion' of this funding.