Why is Anti Money Laundering Important?

Why anti money laundering is important

Anti money laundering (AML) laws provide companies with a set of regulations they must follow to gain compliance. The UK laws are detailed and include protection measures, offences and their respective penalties.

A report by the Financial Action Task Force (FATF), the international regulating body, states that the UK faces a huge task. It uncovered that UK organisations often ‘turn a blind eye’ to proceeds of crime, and only 0.8% of investigations show that actions are appropriate to the threat.[1]

Although the UK is traditionally strong in these areas, it shows the growing importance of AML laws. Furthermore, it shows that UK companies should stay up to date with laws to combat evolving problems.

Why Anti Money Laundering is So Important

AML laws are still very important in the UK, because financial crime shows no signs of stopping. In addition, complying with anti money laundering laws can strengthen a business’s reputation, enhance customer happiness and help avoid potentially heavy financial penalties.

Financial Crime Will Not Stop Anytime Soon

Although UK companies are well-practised in the rule of law and anti-corruption, crimes still persist. This is no time to rest on laurels, as Transparency International UK found that 766 UK businesses were involved in the laundering of money. This means that in 2017 alone, there was a huge 80 billion pounds worth of laundered money in the UK.[2] Meaning, that implementing money laundering regulations is as important as ever.

Consolidating the Organisation’s Reputation

AML is very important to consolidate the future of an organisation, as it reinforces reliability and transparency.

Implementing money laundering regulations can boost the brand-name and service being offered, as customers see a business as a safe-bet. They will not want to buy from companies that are undergoing an investigation, or that have been fined under anti money laundering laws.

Accusations of financial corruption are serious and tend to be headline news. Since businesses want to be in the headlines for the right reasons, compliance is important in securing reputations.

Not to mention, financial penalties resulting from poor compliance measures can threaten the stability of a business.

Preventing Business Penalties

One of the most important functions of AML laws is that it prevents any kind of penalties, be it imprisonment or fines.

Fines imposed by HMRC depend on the offence and the law covered by it. For example, under the 2002 Proceeds of Crime Act, the maximum sentence for concealing a criminal act is around fourteen years.[3] In contrast, a sentence for tipping off (telling someone that they are under investigation) is a maximum of two years.

No organisation wants penalties, and fines can be crippling. Normally, they are a percentage of global turnover or revenue. However, if a case is serious enough, fines can be unlimited. This can seriously affect an organisation’s capacity to do daily business and pay wages.

Ensuring a Positive Customer Experience

Finally, remember that the customer is king. If they interact with an accused organisation, they will not want to use their services. They will simply move to a trustworthy competitor and the organisation will lose precious revenue.

Customers do not think about money laundering and compliance when making a purchase, as they expect it to be in place. Meaning, that because customers have the specific goal of purchasing a service, they stay far away from legal and compliance problems.

This means that successfully implementing AML regulations can put customers at ease. They do not want unnecessary problems which will affect a purchase, especially when it is out of their control. Trust between customers and businesses is vital, and they will be loyal if an organisation is transparent about compliance.

For more information, you can complete our online anti money laundering training course here.

[1] https://www.transparency.org.uk/press-releases/uks-dirty-money-problem-confronted/

[2] https://www.transparency.org.uk/press-releases/uks-dirty-money-problem-confronted/

[3] https://www.lexisnexis.com/uk/lexispsl/corporatecrime/document/391421/55KB-9471-F188-N12W-00000-00/Money_laundering_under_the_Proceeds_of_Crime_Act_2002_overview