Slipping through the net. The financial conduct authority’s approach in lessening the incidence of money laundering in the UK

Author:Adebola Adeyemi
Position:Centre for Law and Business, Lagos, Nigeria and PAC Solicitors, Lagos, Nigeria
Pages:203-214
SUMMARY

Purpose The purpose of this paper is to highlight the activities of the FCA with respect to the incidence of money laundering and highlight regulatory gaps. The financial services sector provides a crucial infrastructure for the promotion of wealth and innovation in the UK. This attractive infrastructure also appeals to criminals looking to launder the gains of their illicit... (see full summary)

 
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Slipping through the net
The financial conduct authoritys
approach in lessening the incidence of
money laundering in the UK
Adebola Adeyemi
Centre for Law and Business, Lagos, Nigeria and PAC Solicitors, Lagos, Nigeria
Abstract
Purpose The purpose of thispaper is to highlight the activities of the FCA with respect to the incidenceof
money laundering and highlight regulatory gaps. The nancial services sector provides a crucial
infrastructure for the promotion of wealth and innovation in the UK. This attractive infrastructure also
appeals to criminalslooking to launder the gains of their illicitactivities.
Design/methodology/approach The paper analyses the UK money laundering regime, highlighting
specic challenging areas. The paper investigates the role of politically exposed persons and the use of
corporate structuresin promoting money laundering. In this context, it also becomes crucial to investigate the
role of nancial institutions and the sufciency of their governance approach in lessening the incidence of
money laundering. The paperinvestigates secondary sources and relies on their ndings. It comparesthese
ndings to the regulatoryoutcomes.
Findings The paper recommendssteps that can be used to lessen the incidence of money launderingin the
UK. From the reports evaluated,it is clear that the Financial Conduct Authority is working towardsreducing
the incidence of money laundering, but this could be further strengthened with the adoption of additional
enforcementtools.
Practical implications The paper suggests that different approaches should be used based on rm
size, the type of business and the risk that a nancial services rm presents to the nancialsector. A large
rm will needto bear more regulatory burden compared to a smaller rm.
Originality/value The paper investigates the current approach to minimising the incidence of money
laundering in the UK. It suggests that the regulatorcan guide nancial services rms to meet the regulatory
objectives by relying on an approach that discerns the regulatory risks presented by different rms
dependingon their size.
Keywords Financial crime, Financial conduct authority, Money laundering, Benecial ownership,
Politically exposed person
Paper type General review
1. Introduction
Money launderingis a nancial crime with wide rangingconsequences. Generally,regulators
have sought to make it difcult to spend the proceeds from an illicit activity. In response,
criminals have devised means of laundering their proceeds ofcrime and disguising it using
the legitimate nancial system so that the proceeds appear to be legitimately earned. It is
estimated that on a yearly basis, around £24bn representing the proceeds of corruption is
investedin the UK (HM Treasury, 2016, p. 3). Whilethe economic and socialcost attributed to
the money laundering is immeasurable, the incidenceof money laundering affects theproper
ordering of nancial markets to the extent that those holding laundered funds will have an
unfair advantage over those carrying out legitimate business (Cox, 2014, p. 18). This will in
turn increase regulation and increase the cost fordoing business as the increased regulatory
Incidence of
money
laundering in
the UK
203
Journalof Money Laundering
Control
Vol.21 No. 2, 2018
pp. 203-214
© Emerald Publishing Limited
1368-5201
DOI 10.1108/JMLC-06-2017-0025
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1368-5201.htm

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