£24bn a Year: Trade-based Money Laundering in the UK is on the Rise

According to the Home Office, it is found that organised crime costs the UK at least £24bn a year. This shows a passive approach to economic crime is not enough. In the digital age, the immense scale of multi-layered global trade chains - and the many legitimate trading processes and structures these allow - provide a number of ways for trade-based money laundering (TBML) to be carried out by criminals. Azizur Rahman, Senior Partner at Award-winning serious fraud solicitors, Rahman Ravelli, says: “Economic crime is ever-evolving as new technologies bring new opportunities and create a complex web for criminals to hide behind. At the same time, the regulatory landscape is also changing; bringing with it numerous challenges that can potentially make things even more complicated for businesses that want to protect themselves from such activity.” A global economic crime survey by PwC looked into the effect of TBML on businesses and organisations and noted that “the onus is now squarely on the shoulders of the business community to protect itself, and its stakeholders, from economic crime”. In the financial services sector alone it found that:

• 1 in 5 had experienced enforcement actions by regulators
• Over 25% were yet to conduct risk assessments across their entire global footprint
• 33% cited issues with data quality that led to only 50% of TBML incidents triggering security alerts

“But,” says Imran Farooqi, Partner at PwC, “it’s not just financial services institutions. Any organisation that facilitates financial transactions – including non-bank money service businesses such as digital/mobile payment services, life insurers and retailers, to name a few – is also coming within the scope of anti-money laundering legislation worldwide.” Julian Dixon, CEO of anti-money laundering specialist Fortytwo Data, says: “The tentacles of anti-money laundering regulations are reaching deeper into more industries than ever before. Estate agents and casinos are two sectors facing more stringent requirements, thanks to the latest EU money laundering directives. The importance of these checks on your clients should not to be understated and suspicious activity identified in one company can lead to the dismantling of entire criminal networks.” Legislative and regulatory changes have made it abundantly clear that the responsibility for preventing, protecting and responding to economic crime rests firmly with businesses and organisations. Rahman Ravelli has published an in-depth guide explaining how digital technology can help companies stay on top and prevent fraud. You can see the guide here.