1. The UK Anti-Money Laundering Regime – Costs, Benefits and Effectiveness Karen Silcock and Felicity Banks

2. ICAEW The UK Framework Based on EU Third Directive/FATF Legislative framework – Money Laundering Regulations 2007 – Proceeds of Crime Act 2002 – Terrorism Act 2000 – Counter-Terrorism Act 2008, Schedule 7 Regulatory and Professional framework – Eg FSA Rules/Professional Ethics Industry Guidance (Treasury approved ) – Joint Money Laundering Steering Group – Consultative Committee of Accountancy Bodies

3. ICAEW The UK Framework – turning law into practice Requirements embedded in law and regulation are brief and principles based Industry Guidance fills out the requirements to give a practical guide to compliance, making them easier to interpret and enforce The UK Courts of Justice in the UK are required to consider Treasury approved Guidance in their interpretation of the requirements – so they essentially have the force of law.

4. ICAEW The UK Regime – The Regulated Sector Financial Institutions Designated Non-Financial Institutions and Professions (DNFBPs) – Accountants and lawyers – High value dealers, estate agents and money service businesses – Casinos

5. ICAEW The UK Regime – Key Features Comprehensive CDD requirements Suspicion/knowledge based reporting regime – no routine transaction reporting All crimes reporting No de minimis (crime type or monetary) Inclusion of passive “laundering” (inclusion of proceeds of own crime) Criminalisation of non-reporting Strong enforcement

6. ICAEW The UK Regime – the outcomes Major effort/resource focus in regulated sector High regulatory requirements, CDD, training, record keeping etc plus reporting Compliance is costly – but can aid good business decisions Reporting outcome, ie provision of intelligence, very strong c 200,000 reports per annum Increasing efforts in law enforcement to optimise use of intelligence – investment in information management systems – “mainstreaming” use of SARs in non-financial crime – increasing SARs “hits” in investigations including in violent crime

7. ICAEW The UK Regime – contrast to other EU member states Other EU states tend to have much more limited reporting requirements, eg restrictions on reportable crime Resulting difference in outcomes are stark – reports by accountants are in the thousands annually in UK, in single figures in most other EU member states Other EU member states are making all the same investments in regulation, CDD. Training, record keeping etc But seem to produce little of worth to law enforcement? What is the optimum cost/benefit balance?

8. ICAEW The UK Regime v other styles – issues All crimes v selected crime reporting? Cost benefit ratio – can the costs to the private sector be justified by community benefit? The client/professional relationship – where is the right balance between confidentiality and public benefit? Confidentiality of reports – how can the safety/reputation of the reporter be protected In a suspicion based system how can we ensure human rights are respected – large quantities of personal information – possibly no crime?

9. ICAEW The UK Regime – high cost/broad scope but high intelligence value We think it is worth it Reduced risk of terrorism and other serious crime Better reputation as a good and safe place to do business Contribution to global and national fair play Recovery of proceeds of crime

10. ICAEW The Regulated Sector - Guidance Financial Institutions – www.jmlsg.orgwww.jmlsg.org Accountants – www.icaew.com/moneylaundering www.icaew.com/moneylaundering Lawyers – www.lawsociety.org.uk/moneylaundering www.lawsociety.org.uk/moneylaundering High value dealers and money service businesses - www.hmrc.gov.uk/MLR/ www.hmrc.gov.uk/MLR/

11. The UK Anti-Money Laundering Regime – Costs, Benefits and Effectiveness Karen Silcock and Felicity Banks