Financial News has revealed that the Financial Conduct Authority (FCA) targeted hundreds of businesses last year as part of a crackdown on money laundering reporting officers.
In March of last year, FN disclosed that the City watchdog had reached out to companies that had gone through three or more Money Laundering Reporting Officers (MLROs) in the preceding three years, stating that "in certain firms, substantial turnover within this function has impeded efficient supervision".
The regulator was worried that a revolving door in a job this significant, one that ensures that illicit money isn't leaving the company, would indicate a deficient work environment or a shortage of resources for the position.
The watchdog wrote to 643 companies, according to a Freedom of Information Act request, requesting an explanation for why employees had held the role for such short lengths of time. The FCA targeted a "sample" for additional investigation.
It hasn't disclosed the businesses targeted.
In recent years, the FCA has penalised banks for money-laundering offences in a number of high-profile cases. After failing to verify the identity of a Bradford-based gold trader who was depositing up to £1.8 million in cash at the lender every day, NatWest was fined more than £264 million in 2021.
A £107.7 million fine was imposed on Santander's British division in 2022 due to supervisory violations involving 560,000 business clients.
What is money laundering?
The illicit practise of disguising huge sums of money obtained through criminal activity, such as the support of terrorism or drug trafficking, as coming from a lawful source is known as money laundering. Since the proceeds of illicit activities are seen as dirty money, they are "laundered" to appear clean.
Smurfing, or "structuring," is a popular method of money laundering. To avoid being discovered, the thief divides up huge sums of money into numerous little deposits, frequently distributing it across numerous accounts.
Currency exchanges, wire transfers, and "mules"— cash smugglers who move huge sums of cash over borders and deposit them in foreign accounts where money-laundering regulation is less strict— can also be used to conduct money laundering.
What is the punishment?
According to the Proceeds of Crime Act of 2002, money laundering is punishable by up to 14 years in prison or a hefty fine.
The severity of the offence rises with the quantity of money laundered, so the sentence is based on that amount.
