Fraud Updates 2003
18 December
It has been reported that a last minute amendment to the new money laundering regulations in the UK will mean that thousands of additional companies will now be required to comply with the legislation. Failing to comply could result in company directors and senior staff facing terms of imprisonment of up to 14 years. The amendment to the legislation means that it will now cover companies who are involved in the provision of "services in relation to the formation, operation or management of a company or a trust." This definition arguably means that even the cleaning firm which a company uses could be forced to comply with the regulations.
Obligations placed upon companies caught by the regulations include requirements to appoint a money laundering reporting officer, to train staff to understand the meaning of money laundering and to ensure that staff are aware of the duty to report suspicious transactions.
Such wide ranging duties to report will be difficult to police. In the event that firms do comply and make suspicious transaction reports it is considered that the National Crime Intelligence Service will be swamped with reports. This may mean that serious crimes are missed. This is probable not only due to the number of companies caught by the legislation but also to the absence of a de minimis approach to the duty. There is a duty to report money laundering transactions whether they involve the theft of company stationary or a serious multi-million pound money laundering transaction.
16 December
An anti-corruption probe of former Kenyan politicians and civil servants has uncovered at least $1 billion of illegal gains according to reports in today's Financial Times. Steps are now being taken to freeze some of the assets.
Investigations have focused on companies alleged to have been used to generate hundreds of millions of dollars in state subsidies and financing for fictitious gold and diamond exports. It is also believed that funds have moved through accounts of banks based in various countries around the world.
In large scale international theft and money laundering it is essential to act quickly and covertly, co-ordinating lawyers and investigators around the world. Disclosure, search and freezing orders can be used to locate and secure assets. Third parties who have knowingly assisted stolen funds to be laundered may also be liable to compensate the victim. Liability may also lie against the auditors of companies who have negligently failed to report fraud, allowing that fraud to continue unchecked.
| January 2004 | November 2003 |