Last week the UK Government announced its new Joint Money Laundering Intelligence Taskforce (JMLIT), a 12 month trial project developed by the Home Office, National Crime Agency (NCA), City of London Police, British Bankers' Association (BBA) and other financial institutions. Its aim is to improve intelligence sharing to help fight against money laundering and organised financial crime.
In response to the announcement, the Head of the Confederation of British Industry (CBI) claimed the country's onerous anti-money laundering (AML) rules were doing more harm than good – tying up mid-sized firms in unnecessary red tape.
The CBI's concern related to the ability of UK firms to access trade finance in an effort to explore new markets and grow their export revenues.
While John Cridland, Director General of the CBI, was keen to stress the importance of a regulated environment, he did contend with the application of AML regulation, calling it "cumbersome and complex" and "acting as a brake for businesses wanting to sell their products and services around the world."
The Director General urged a review of the rules to explore how AML regulation could be less damaging to legitimate UK business interests.
Both the launch of the JMLIT and comments from the CBI highlight the dilemma facing regulators. On the one hand there is the need to minimise the extent to which criminal organisations can use the global financial system to cleanse their cash - just as it is vital to choke financing for terrorism. On the other is the imperative for financial organisations, and their business customers, to conduct legitimate transactions with international partners with the minimum of cost and external interference.
Irrespective of the gloss put on the issue, it is inevitable that expanding anti-money laundering and counter-terrorist financing (CTF) legislation will impose greater costs on businesses across the board – not simply those in the financial services sector, or the well-governed areas of solicitors, accountants, estate agents and gaming.
Businesses looking to expand abroad, or those looking to ramp up their import/export revenues, will be subject to even greater regulatory burdens. The key to minimising impact is to fully understand the particular regulatory environment and carry out the relevant levels of due diligence.
p.s. 3 ways you can apply this information right now to better understand your supply chain