Financial Crime Summary Q4 2017

8th January 2018

Summary of Relevant Output on Money Laundering and Financial Crime

Period 1st October 2017 to 31st December 2017


Sites Reviewed for this bulletin:

Financial Conduct Authority (FCA)

Prudential Regulation Authority (PRA)

British Bankers’ Association (BBA)

European Securities and Markets Authority (ESMA)

Commodities Futures Trading Commission (CFTC)

Financial Action Task Force (FATF)

HM Treasury (HMT)

Joint Money Laundering Steering Group (JMLSG)

National Crime Agency (NCA)

Transparency International (TI)

Deloitte Forensic Centre (DFC)

Credit Industry Fraud Avoidance System (CIFAS)

Financial Fraud Action UK (FFA)

International Compliance Association (ICA)

Emerald: Journal of Financial Crime (JFC)

Financial Fraud Action, Police: The DCPCU

BBC Business

Telegraph Finance

Financial Times

New York Times





Each quarter, CPA Audit looks for the most interesting, relevant and pressing financial crime news, in order to engage your interest and open your eyes to potential risks your firm might face. Some of these cases you may have heard about on the news, whilst others may be more obscure.

The aim of this summary is to give you a picture of financial crime across the final period of 2017 – the cases and regulations below demonstrate the vital importance of having systems and controls in place to protect against financial crime potentially impacting your own business.

The final quarter of 2017 saw significant global focus on tax havens with the leaking of what have infamously come to be known as the ‘Paradise Papers’. Additionally, the British government renewed its commitment to combating financial crime in publishing its future strategic vision and announcing new agencies to be at the forefront of fighting money laundering and terrorist financing.

Global clampdown on tax havens

Wealthy individuals continue to exploit loopholes in tax jurisdictions all over the world, often utilising opaque and obscure corporate structures and offshore vehicles. Upon the backdrop of the Panama Papers, the line between tax avoidance and tax evasion is becoming ever-finer, spurred on by the revelations of the leaked Paradise Papers in November.

The Paradise Papers consist of over 13 million leaked documents relating to offshore investments. The papers implicated public figures, politicians, monarchs and celebrities across the world in secretive tax avoidance schemes.

Tax evasion is a crime, and with the distinction between it and tax avoidance becoming increasingly blurred, authorities across the world have placed some jurisdictions under increased scrutiny. Following this trend, and in the aftermath of the Paradise Papers, the EU published its first ever list of 17 non-cooperative tax jurisdictions. The EU blacklist of tax havens is intended to encourage those listed to “change their ways” and increase transparency and fairness, as cited by EU commissioner Pierre Moscovici.

Tax evasion is a crime, and given the Criminal Finances Act 2017 (CFA) officially came into force in September, it must be taken seriously. The CFA introduced the criminal offence of failing to prevent the facilitation of tax evasion, hence firms should find the EU blacklist a useful resource to implement into their procedures designed to mitigate the risk of any associated person facilitating tax evasion.

Government updates its National Risk Assessment and publishes Anti-Corruption Strategy

In October, the government published the National Risk Assessment 2017 which follows on from the first ever National Risk Assessment produced in 2015. The National Risk Assessment is an important publication as it provides a high-level overview of the risks different sectors face in terms of money laundering and terrorist financing.

Key findings included that high end money laundering and cash based money laundering remain the greatest areas of money laundering risk to the UK. New typologies continue to emerge, including money laundering through capital markets and increased exploitation of technology. Financial institutions should be cognisant of these new trends and make arrangements to mitigate the new risks, especially technological risks, associated with their businesses.

The National Risk Assessment 2017 also found that Professional services are a crucial conduit for criminals looking to disguise the illicit origin of their funds. This is an important finding that firms should give due consideration to when performing due diligence as part of their client on-boarding process. It may be the case that some professional services firms require enhanced due diligence as a result.

Following on from the government’s demonstrated commitment to assessing sectoral risks of money laundering and terrorist financing, in December, the Department for International Development and Home Office published the UK’s anti-corruption strategy 2017- 2022. The strategy is predicated upon six priorities, comprised of the following:

  • Reduce the insider threat in high risk domestic sectors
  • Strengthen the integrity of the UK as an international financial centre
  • Promote integrity across the public and private sectors
  • Reduce corruption in public procurement and grants
  • Improve the business environment globally
  • Work with other countries to combat corruption

Specifically, with regard to enhancing the integrity of the UK’s financial system, the government set its intended long-term goals in its anti-corruption strategy. Financial services firms can expect initiatives to be introduced that deliver greater transparency over who owns and controls companies and other legal entities, along with stronger investigatory and enforcement powers (we can already see this with the creation of two new agencies alluded to in this summary).

The government also intends to further enhance its anti-money laundering (AML) and counter-terrorist financing (CTF) capabilities and to forge public-private partnerships that allow for information to be shared and improve the targeting of AML & CTF initiatives. The debate will also be reopened on extending corporate liability beyond bribery and tax evasion to wider economic crimes. Financial institutions should therefore be prepared for the potential introduction of new corporate criminal offences and give due consideration to how any aspect of their business may be effected.

As stipulated by the strategy, a new ministerial position will be created within the Home Office, with an individual to be appointed as Minister for Economic Crime. This further signals how seriously the government is committed to fighting financial crime and ensuring that the UK is hostile to dirty money.

Government announces new National Economic Crime Centre

Official figures suggest that over £90bn a year is laundered each year in Britain, which includes inter alia, money laundered from large-scale drug operations and human trafficking. Financial institutions are particularly at risk of facilitating money laundering at the layering phase.  Home secretary Amber Rudd announced in December the creation of a new National

Economic Crime Centre, to operate within the National Crime Agency with the with the power to task the Serious Fraud Office to investigate the worst cases of fraud, money laundering and corruption.

This development is a strong signal that the government remains committed to ensuring that the UK remains a hostile environment for the proceeds of criminal activity. The new National Economic Crime Centre also intends to incorporate advanced analytics and intelligence gathering into its programme of operations, reinforcing that enforcement capabilities are increasing to meet the demand of 21st century money laundering tactics.

UK establishes new money laundering watchdog

A new watchdog has been created to further tighten and intensify the UK’s defences against money laundering and terrorist financing. The Office for Professional Body AML Supervision (“OPBAS”) which is hosted by the FCA, will work across the UK’s anti-money laundering supervisory regime and will oversee the adequacy of the anti-money laundering supervisory arrangements of 22 professional bodies, and have powers to scrutinise and penalise those that have not implemented adequate standards of supervision.

The OPBAS regulations will take effect on 18 January. The implementation of OPBAS reinforces the government’s commitment to reform the AML supervisory regime. It is the latest step taken by the government which will complement wider work including an enhancement of law enforcement powers through the Criminal Finances Act and updating Money Laundering Regulations in order to implement the latest international standards.

These objectives should in theory achieve a level of consistency and clarity across industry participants and sectors. The enactment of the Money Laundering Regulations 2017 introduce new aspects of the money laundering regime which create a need for detailed and uniform guidance. Cohesion across the board will also, hopefully, reduce avenues for exploitation of industry participants and prevent inadvertent failings.

As a result of uniform guidance those in the regulated sector would have greater confidence in their firm-level money laundering and counter-terrorist financing policies, procedures and practices which would give them greater confidence in their day to day risk management activities.

OPBAS will mean more oversight of the supervisors. The creation of yet another supervisory body may be seen as increasing the regulatory burden firms face, however, the precise nature, scope and role of OPBAS will ensure that the burden on firms will remain proportionate to their size and complexity.


Q4 2017 was characterised by a concatenation of government actions which interface with one another to form a robust network of defences against financial crime in the UK. The question remains as to whether these newly created agencies, along with the current ones, will be able to effectively deal with the threats faced, however their creation is most certainly a step in the right direction. As we look to 2018, firms can expect to see governments across the world continuing to clamp down on tax havens and finding new ways to meet the challenge of money laundering and terrorist financing.

Next steps

CPA Audit’s compliance team is highly experienced and has engaged in extensive correspondence with the FCA concerning authorisations, anti-money laundering frameworks and other compliance-related issues.

Our team are able to assist in a wide variety of ways in relation to the above, including (but by no means limited to):

  • Bespoke Anti-Money Laundering training & audit;
  • FCA Authorisations;
  • Variation of Permission applications;
  • General advice and assistance on regulated activities and their scope

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