Suspected cases of money laundering hit record levels last year, yet less than one-third of UK-registered banks keep records of irregular financial transactions.
The National Criminal Intelligence Service (NCIS), which is charged with curbing money laundering, said yesterday that some 18,408 disclosures were made to its Economic Crime Unit last year, a year-on-year increase of 27 per cent. Between 1998 and 1999, disclosures rose only 2.6 per cent.
John Abbott, the NCIS's director general, said there was a general upward trend in money laundering in the UK, because the prestige of British financial services companies provided a cloak of respectability for illegal transactions.
But increased vigilance had also contributed to the rise. The offences in question were increasingly related to drugs, illegal immigration and other organised crime.
"UK banks can make a transaction appear legitimate. They have a high reputation and therefore a great attraction to criminals," he said.
Only 170 of the UK's 575 registered banks returned standard disclosure forms to the NCIS last year. Mr Abbott said it was imperative that financial services firms are alert to transactions that customers would not usually make. "You still occasionally get people walking into banks with a suitcase full of millions," he said.
There was also concern that the legal and accountancy professions had provided few reports, despite their attractiveness to money launderers.
The Financial Services Authority will gain new powers in December to punish breaches of regulations on monitoring suspect transactions. Making a disclosure is not treated as a breach of an organisation's duty of confidentiality to a client. Money laundering – assisting a criminal to hide the proceeds of crime – carries attracts a maximum penalty of 14 years' imprisonment or an unlimited fine, or both.
The NCIS cited a money laundering case involving a European family that lived in an inexpensive house financed almost entirely by a mortgage. Suspicions were raised when they sought to buy a $1.5m building using a bank loan for which two life insurance policies were lodged as security.Reuse content