UK Government Launches Consultation On Prevention Of Financial Crime

by Robin Pilgrim, LawAndTax-News.com, London

03 October 2006

Economic Secretary to the UK Treasury, Ed Balls, on Friday launched a public consultation on proposals to tackle money laundering and terrorist finance in the money services business sector.

Mr Balls explained that:

"The vast majority of bureaux de change, cheque cashers and money remitters are honest and important partners in the fight against financial crime. But the scale of the challenge we now face demands we strengthen our current financial controls so that we can root out money laundering and terrorist financing."

"Our proposals to replace the registration system with a licensing system, take tougher action against non-compliance and demand firms keep better records, build on the controls we introduced five years ago and give us the powers we need. I also want to give firms in the sector better support and guidance and recognise the important contribution they make to our financial system at home and abroad."

The consultation outlines a package of proposals to reduce the harm caused by financial crime and terrorism by combating abuse of money service businesses and by shifting the burden of supervision onto firms that pose the highest risk.

The proposals on which feedback is invited include:

• Keeping criminals out of the money services business sector by replacing the current registration system with a licensing system;
• Strengthening HM Revenue and Customs' enforcement activity on the highest risk operators with tougher action against, including prosecution for persistent non-compliance;
• Requiring financial records to be maintained in a consistent form, and in English, to establish stronger audit trails for investigators;
• Building a more effective compliance culture in the money services business sector through enhanced guidance for, and engagement with, the money services business sector; and
• Robustly tackling serious or persistent non-compliance among money services businesses, including through prosecution.

The launch of the consultation follows recent announcements by the Chancellor and the Economic Secretary to the effect that the government intends to target money laundering and terrorist finance rules on the basis of actual risk, rather than adopting a 'tick box' approach, and comes after recent action to identify and freeze funds of suspected terrorists, with 187 accounts having been frozen.

The consultation will close on 6th December 2006.

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