BEST PRACTICE C opious amounts of dirty money pass through the UK in fact every six minutes, an estimated 1m is laundered through the UK economy. This startling stat has given London the unenviable title of money laundering capital of the world. And with dirty money, comes illicit activity. With so much cash flying around, it can become a towering task for treasurers the gatekeepers of money to work out whats clean and whats not. To highlight the nature of the problem, First AML, an anti-money laundering compliance consultancy, recently filled washing machines with 1m in cash outside the Bank of England: statement made. Money laundering is a real problem, and the UK is at the heart of it, whether it knows it or not. A significant amount of money laundering happens unknowingly, and treasurers need to understand the procedures their company has in place to buffer against unwitting enablers of this crime. A survey involving more than 200 financial service professionals across the UK revealed that the majority (57%) are only somewhat confident in their anti-money laundering procedures. This was joined by more than half (52%) of respondents identifying an instance of money laundering in the past year, with 23% detecting more than one. So how can treasurers be on guard against money laundering and avoid reputational and regulatory damage in their organisation? KEEP COMPLIANT Compliance is key to safeguarding against money laundering. The recession is putting mounting pressure on businesses to cut budgets, and compliance can often be sacrificed as a result. But this is a grave mistake. Instead, as discussed below, investing in technology can be the notably more efficient and streamlined approach to saving on costs and improving antimoney laundering (AML) processes. Recent high-profile cases are a clear example of the damage that can arise from a lack of compliance, money laundering controls and AML processes. Failure to invest time in shoring up such measures can expose firms to hefty fines, with supervisory bodies, such as the Financial Conduct Authority (FCA), stepping up their level of supervision. But companies often fall foul of regulations unintentionally, with manual customer due diligence (CDD) processes and a lack of diligence on updating customer files proving to be considerable stumbling blocks. USE TECHNOLOGY Even if compliance processes are aligned with AML regulations, it can still be incredibly difficult to adhere to changing rules while managing everything else. Know Your Customer (KYC) documents like passports and source of wealth information can often be stored ad hoc across several locations; for example, they are kept as EU HAS CRYPTO MONEY LAUNDERING IN ITS SIGHTS In December 2022, the EU announced agreement on an anti-money laundering (AML) regulation and a new directive (AMLD6). The new EU anti-money laundering and combating the financing of terrorism (AML/CFT) rules will be extended to the entire crypto sector, obliging all crypto-asset service providers (CASPs) to conduct due diligence on their customers. The European Council called for customer due diligence measures when carrying out transactions amounting to 1,000 or more and added measures to mitigate risks in relation to transactions with selfhosted wallets. Third-party financing intermediaries, persons trading in precious metals, precious stones and cultural goods, will also be subject to the obligations of the regulation, as will jewellers, horologists and goldsmiths. By limiting large cash payments, the EU will make it harder for criminals to launder dirty money. An EU-wide maximum limit of 10,000 is set for cash payments though member states will have the flexibility to impose a lower maximum limit if they wish. 38 ISSUE 1 2023 treasurers.org/thetreasurer TT ISSUE 1 23 pp37-39 AML.indd 38 23/02/2023 13:21