All businesses, large or small, domestic or international, need to understand the risks of financial crime. Financial crime can affect your business in several ways. Your business may:
- be a victim of financial crime;
- be targeted by criminals to facilitate financial crime; or
- become involved in an offence as a result of conduct by your staff or management team.
As in-house legal counsel, your role is to protect and defend your business, and help it to survive a crisis if it is targeted by, or investigated for, financial crime.
The Law Society provides a wide range of tools and information to support you.
Key areas of risk
Fraud is one of the most well-known types of financial crime and a key risk for corporate businesses.
If your organisation has been a victim of fraud, you should contact Action Fraud on 0300 123 2040 or report it online. Action Fraud is run by the National Fraud Authority and is the UK’s national fraud reporting centre.
The Bribery Act 2010 applies to businesses of all shapes and sizes which makes bribery a key risk for commercial entities. Further information about the provisions of the anti-bribery legislation and how you can comply with it can be found at:
The Law Society is currently engaging with government on proposals to introduce deferred prosecution agreements (DPAs) for corporate entities relating to financial crime. Learn more about our representations and what DPAs could mean for your organisation.
Whether your company is UK-focused or multinational, it is increasingly likely that you will come into contact with the international sanctions regime. All businesses need to ensure that they are complying with sanctions, which means that you need to think about who your organisation is doing business with and understand how sanctions could apply to them. Chapter 4.11 of the AML practice note provides further information about sanctions.
Money laundering and terrorist financing
All businesses must comply with anti-money laundering and counter-terrorist financing (AML/CTF) legislation. If you do not and your business becomes involved in money laundering or terrorist financing, you risk:
- criminal penalties
- civil claims
- regulatory action
- reputational damage
Exactly how the AML/CTF legislation applies to your business depends on whether or not you are in the regulated sector.
In the regulated sector
The Money Laundering Regulations 2007 (the regulations) apply to everyone in the regulated sector. Failure to comply with the regulations could result in criminal sanctions.
The regulations require you to:
- carry out customer due diligence and ongoing monitoring if necessary
- keep records of due diligence and ongoing monitoring
- provide anti-money laundering training to staff
- put in place systems and procedures for reporting suspicious activity
The Law Society’s anti-money laundering practice note provides further information on the requirements of the regulations.
The money laundering offences are set out in the Proceeds of Crime Act 2002 (POCA). POCA applies to all solicitors, however some POCA offences apply only to those in the regulated sector, or to money laundering reporting officers (MLROs).
Separate offences relating to terrorist financing are set out in the Terrorism Act 2000. The principal terrorist property offences apply to all solicitors, but the failure to disclose offence and the two tipping off offences only apply to those in the regulated sector.
Whether you are your organisation’s MLRO or not, it is likely that there will be industry-specific AML/CTF regulations that apply to your business and with which you will need to comply.
All other organisations
Even if your organisation is not in the regulated sector, you could still be targeted by financial criminals and prosecuted for a money laundering offence under POCA or a terrorist financing offence under the Terrorism Act 2000.
The Law Society’s practice note and regular articles may assist your organisation to spot warning signs of money laundering and emerging risk areas. We also provide useful information on how to report concerns to law enforcement and links to other sector-specific AML/CTF guidance.
Further advice and articles can be found on the money laundering and financial crime page of the Law Society website.