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It’s not unusual for me to review a few emails a week requesting me to complete a form, submit certain data, and press send. I am now aware that most of these are scams and trying to lure me into their scam, I am always vigilant and double-check, then delete and block. That’s a relatively simple way to keep on top of scam emails, but money laundering is a criminal offence and there are hefty fines associated with anyone who is found to be associated with the laundering activity. 

I think most people would recognise the term money laundering in relation to when cash is generated through illegal activities, such as drugs or prostitution and that cash needs to re-enter the economy as clean money, ie: the person is able to spend that money on goods and services. It is becoming harder for those criminal activities to ‘wash’ their money, especially post covid when so many businesses stopped using cash altogether. Historically restaurants and other cash outlets were a way of moving this illegal cash back into the system. 

 

There are a number of other well know methods of money laundering, which include bank methods, smurfing (known as structuring) currency exchange and double invoicing with the aim to always legitimise the money. 

Once the money has made it into the fraudster’s account, this will have been using one of the methods called ‘placement’, this can be through a cash-based business, double invoicing, opening offshore accounts or foreign bank accounts, the money is then ‘layered’. This is when the money then starts to move around the financial system. All IFAs have a set of procedures to follow to check the authenticity of the investor and where the money has come from. An IFA has a strict code of conduct that they have to follow and a process of due diligence. We all have to be able to demonstrate we have attended rigorous training to be able to identify and address specific risks to our business via any form of money laundering. 

All Financial Advisers will know the reporting structure if they suspect any possibility of money laundering. I would immediately have to contact our compliance officer at Coloma and they would then investigate and escalate if they corroborated my suspicions. 

 

Convictions for money laundering can be very serious and an IFA would lose their licence if found to be in collaboration with an illegal activity as well as the potential to be prosecuted. I have never had to report any suspicious activities to our compliance team and I hope I never have to. 

At the end of March this year, the Government launched its Economic Crime Plan 2023-2026 and it has invested a further £400 million, this will include the recruitment of 475 highly trained financial crime investigators, who will span work across intelligence, enforcement and asset recovery at key agencies.