Treasury has released its first national risk assessment (NRA) on the domestic risks of money laundering (ML) and terrorist financing within the regulated sector. This includes the risks associated with cash, new payment methods and UK legal entities and arrangements. It also covers the international risks to the UK from money flowing into and out of the country. The objective of the NRA is to better understand the risks involved, inform the efficient allocation of resources and mitigate those risks. Key findings include:
- UK law enforcement agencies have the most knowledge about cash-based ML but intelligence of other ML patterns is patchy;
- the size and complexity of the UK financial sector means it is more exposed to criminality than those in many other countries;
- the effectiveness of the supervisory regime in the UK is inconsistent;
- the law enforcement response to ML has been weak for an extended period of time; and that
- last year over 350,000 suspicious activity reports (SARs) were filed with the UK Financial Intelligence Unit (UKFIU), the vast majority of those being submitted by the financial sector.
The next steps for the action plan are:
- to plug intelligence gaps, particularly those associated with “high end” ML through the financial and professional services sectors;
- to enhance law enforcement responses to the most serious threats;
- to reform the SARs regime, and upgrade the capabilities of UKFIU; and
- to address the inconsistencies in the supervisory regime that have been identified through the NRA.