Money laundering is a common term applied to a range of activities intended to conceal the unlawful origin of money gained through criminal means. It gives legitimacy to stolen funds. An even more troubling process is terrorist financing. This is a similar process although the recipients and providers of the money involved are generally in agreement. The purpose is to conceal any links between the two parties and provide terrorists with the capital they need to engage in terrorist activities.
You can learn more about both of these processes by consulting your trade association or industry regulator. General information on money laundering is available on the website of the Financial Action Task Force. It’s not just international trade that’s susceptible to money laundering and terrorist financing; these acts can affect domestic businesses as well.
A multitude of law enforcement agencies, regulatory bodies, and professional associations contribute to the fight against money laundering. They’re often led by HM Revenue and Customs (HMRC) and the National Crime Agency (NCA). There are certain industries subject to additional scrutiny based on the Proceeds of Crime Act 2002 (POCA), the Money Laundering Regulations 2007, and the Terrorism Act 2000. Examples of affected businesses include accountants, lawyers, financiers, money service companies, trust and company service providers, casino operators, and estate agencies.
Individuals who work in these sectors have an obligation under POCA to report any suspicious activity or evidence they acquire that suggests the practice of money laundering. Failure to report such information to the NCA is in itself a criminal offence.
POCA is even more far-reaching; similar reporting requirements extend to virtually anyone who comes across suspicious information that suggests money laundering is under way. As long as an individual comes by this knowledge while engaged in a trade, business, profession, or employment, he or she is obliged to report it.
The UK loses several billion pounds to Missing Trader Inter-Community Fraud (aka Carousel fraud) every year. Carbon allowances and VAT concessions are also fertile grounds for VAT fraud schemes. Although these frauds are usually perpetrated by organized criminals, above-board businesses need to retain all of their VAT numbers, records, and invoices and keep them well organized. These records protect a business from potential liability should they come under investigation by HMRC.
Taking steps to protect yourself and your assets if you suspect you’re being targeted by fraudsters. Aperio intelligence advise that you bear in mind that your professional identity also makes a tempting target for fraud.
Your company’s IT system is often a prime target for fraudsters. Malicious software (e.g. viruses, spyware, adware, Trojans, or worms) can be used to gain access to usernames, account information, and credit card data.
These simple steps will go a long way to reducing your vulnerability to fraud:
* Cancel lost or stolen cards immediately. Record their emergency contact numbers separately so that they are available without the cards.
* Make sure all paper waste is disposed of properly. Financial correspondence and official stationary are especially valuable fraud targets.
* Destroy all signed correspondence, financial statements, and invoices once they are no longer required.
* Keep financial information under tight wraps unless you have absolute faith in the trustworthiness of the recipient and the security of the transmission medium.
* Use the Companies House PROOF (Protected Online Filing) service for free and secure filing.
* Shred any and all documents containing customer, staff, or supplier information prior to disposal.
* Always confirm the authenticity of licences, registrations, insurance, and other details independently before making financial commitments to other businesses or individuals.