Money Laundering - Coopers slams fraud reporting guidelines

Leading accountants Coopers & Lybrand this week urged the National Criminal Intelligence Service (NCIS) to issue clearer guidelines on the reporting of suspicious financial transactions, as the government steps up its campaign against money laundering.

Gerry Lagerberg, partner with Cooper’s forensic accountancy section, said that NCIS should assist the Treasury’s campaign by advising firms more clearly when they should report suspicious transactions.

He claims that the intelligence organisation is flooded with so many reports that resources which might be better used elsewhere are being tied up simply in handling the administration.

‘There is a need for NCIS to offer proper guidance on the information they require. NCIS is very short of staff and because the penalties for failing to report are so great, it is being inundated with information,’ he said.

The call follows a pledge by economic secretary to the Treasury Helen Liddell to take a tougher approach to financial crime, by improving information flow between regulators, giving police more powers, and plugging loopholes in existing regulations.

‘A City free of regulatory abuse but open to fraud, corruption and money laundering is not one that will survive and grow in the current climate,’ she told a conference last week.

The raft of measures includes plans to remove confidentiality constraints which prevent the Inland Revenue passing on information which might assist the police in a financial investigation unrelated to tax and a reconsideration of whether fraud trials should be tried by jury.

The government will also review whether unregulated areas, such as company formation agents, bureaux de change, and firms specialising in wiring money abroad, should come under scrutiny.

The measures are likely to prove controversial, sources in the industry warned, because of the difficulty of proving that a company formation agent or a bureau had knowledge of any illegal activity.

Further pressure to clamp down on money laundering came earlier this month from the British Bankers Association, which issued a revised set of guidelines for banks and other financial institutions.

The guidelines make it clear that companies in the financial sector are expected to report any suspicious transactions which relate to tax evasion, in addition to suspected incidents of money laundering. They place obligations on financial services companies to identify the ultimate owners and beneficiaries of off-shore companies and trusts, and to introduce stricter requirements on transactions carried out through the post or over the telephone.