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When criminals commit a crime they do so to make money and as that money can link them
to the crime, they need to disguise the source of their illegal funds.
This is known as money laundering and this is what you need to know about money laundering.
Estimates based on HM Revenue and Customs average at about £40bn a year being laundered year in the UK -
that's over £100m a day.
Much of this money comes from crimes such as robberies, arms dealing, blackmail, kidnapping,
drug trafficking, and tax evasion.
We often think of money laundering being associated with organised crime, but it also applies
to someone working for cash and not declaring their earnings.
Criminals will go to great lengths to disguise the source of their funds, but in general
there's a three stage process.
Firstly, the money needs to get into the financial system. Then it's moved round so it's really
hard to trace. The criminals are now trying to hide the source of the funds.
Finally, it's brought back into the system as if it were legitimate.
The three stages in this process are called placement, layering and integration.
In some cases such as tax evasion the placement stage might not be necessary as the money is already in the system.
An important piece of legislation in the fight against money laundering is the Proceeds of Crime Act.
Proceeds of crime can be anything:
cash property, shares, cars, antiques, art - anything which can have a high value.
It also includes any proceeds from fraud or bribery. And the legislation covers just about everything
that can be done with the proceeds of crime including concealment or helping someone to try and launder it.
So it's not just people who are trying to
launder money for themselves, it also includes people who are involved in money laundering for profit.
You don't even need to be directly involved.
If you work for a regulated firm like a bank, it's now an offence to fail to report a suspicion
of money laundering.
And you'd also be guilty if you tried to tip a criminal off that you, or someone else,
had a suspicion about what they were doing.
All these offences are punishable by personal fines and/or custodial sentences.
So who would you report a suspicion to? Well it depends on where you work.
If you work in financial services and for a regulated firm, you'll have a money laundering
reporting officer, or nominated officer. If you don't, there's the Customs Hotline which
is open to everyone.
You don't need any proof or evidence - just a reasonable suspicion.
But you must make your report to the correct person and you mustn't discuss your concerns
with anyone else - not even colleagues as you don't know who might be involved.
You're not relieved of your personal, legal liability until you report your suspicions
to the correct person. So what's being done to fight this?
Money laundering mostly takes place within the financial system and one of the ways to
spot money laundering is to look out for unusual activity.
For example multiple small cash deposits in different places to avoid suspicion
this is sometimes called smurphing
Or large cash deposits - or anyone wanting to be paid - or pay - in cash
Business which have a high cash turnover can be used to hide cash by mixing it in with legitimate funds.
Payments from offshore bank accounts can alsobe suspicious
especially from countries which are known to have more relaxed legislation.
Cancellations or returns can be used, the customer pays in cash,
but asks for a refund by cheque.
Perhaps the customer didn't seem too concerned about any cancellation fees or penalties.
And if money is being 'layered' or moved around, it might be going out to accounts which are suspicious.
Personal accounts like this one - but without any normal outgoing expenses such as utility bills,
payments to supermarkets or cash withdrawls from ATMs.
All these things can have perfectly innocent explanations, but they can also be red flags
which indicate that money laundering might be going on.
So the more you know about your customer, the businesses and people you work with,
the easier this becomes.
That's why a lot of organisations keep records of their customers and look out for unusual patterns.
In high risk areas such as financial services, they'll have something like a Know Your Customer process
so you can build up a profile of the customer, understand where their funds come from,
and what might be considered normal behaviour for that person or business.
Many of the techniques used by criminals are also used by terrorists- to hide the source of
their funds and also to avoid being connected to their crimes.
Over £300,000 has been laundered since this movie started, and it's passing through someone's hands.
Understanding how the law works to protect us, and what to look out for will help you
play your part in stopping criminals and terrorists.