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Anti-Money Laundering Costs Too High In The UK, Report Suggests

by Robin Pilgrim, LawAndTax-News.com, London

01 July 2005

A new report which aims to give insight into the fight against money laundering in the United Kingdom was published on Tuesday.

The report, 'Anti-Money Laundering Requirements: Costs, Benefits and Perceptions' was commissioned jointly by the Corporation of London and the Institute of Chartered Accountants in England & Wales (ICAEW).

Key findings of the survey were that:

  • International requirements on anti-money laundering are implemented more rigorously in the UK than in other jurisdictions and the related costs are higher;
  • The high costs in the UK do not generate greater benefits to UK-based organisations;
  • Despite the high costs in the UK, the fight against money-laundering is not seen as more effective in deterring or detecting money laundering;
  • The UK has not yet become competitively disadvantaged due to the high costs but it is approaching a 'tipping point';
  • The UK can become more effective at deterring money laundering by raising the perceived likelihood of money launderers being caught and the perceived severity of the punishments, rather than increasing the level of regulation further; and
  • It seems likely that other jurisdictions will incur greater costs in the future as they raise the level of their regulations towards the UK level.

Those questioned in the course of the report's compilation suggested that the effectiveness of the UK's efforts against money-laundering could be enhanced by closing regulatory and communication gaps.

Michael Snyder, Chairman of the Corporation of London's Policy and Resources Committee observed that:

"One major reason companies are drawn to the City of London is because it is an honest environment in which to conduct business. Reputation is central to the City of London's continued success as an international financial and business centre. What we need to do is improve the way our AMLR is perceived and not increase the level of regulation still further. To this end we will work with our partners the ICAEW to urge national and European authorities to ensure future developments in AMLR are not introduced to the detriment of our international competitiveness."

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