Money laundering risk remains a priority for the government and regulators because of the sheer scale of the problem. The clandestine nature of illicit transactions makes it difficult to put an accurate number on the value of money laundered globally, however, the United Nations Office on Drugs and Crime estimates the figure to be between $800bn and $2trn every year, or 2–5% of global gross domestic product.
Responding to an alleged scheme originating in Russia that involved the 'cleaning' of some £65bn in assets, £600m of which is understood to have been routed through UK banks, the Economic Secretary to the Treasury, Simon Kirby, told parliament in 2017 that the "government will do what it takes" to crack down on such activity. "We need to ensure that sophisticated criminal networks cannot exploit our financial services industry," he added.
As recognised in the second National Risk Assessment report, the UK's financial services sector is a major global hub that attracts investment from across the world. Its size and openness also make it attractive to criminals seeking to hide the proceeds of crime among the huge volumes of legitimate businesses.
This vulnerability to such abuses has prompted a heightened regulatory response, the Financial Conduct Authority (FCA) is stepping up its efforts to reduce poor money laundering practices by issuing heavy penalties. In January 2017 the regulator fined Deutsche Bank £163m for not maintaining an adequate anti-money laundering (AML) framework between 2012 and 2015, the largest fine ever issued in the UK for such a failure.
Legislative oversight has also increased, and this applies to various sectors, not just financial services. On June 26 2017 the UK implemented the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLR 2017), replacing and increasing the scope of the pre-existing Money Laundering Regulations 2007…