By Dan Byrne for AMLi
AML experts have sharply criticised the involvement of a controversial British trade group in cleaning up the nation’s deteriorating AML reputation.
The Association of Company Registration Agents (ACRA) has been lobbying the UK government to hire some of its member companies to carry out identity checks on the owners of corporate bodies.
Identity checks are seen as important in filtering out potential fraud or at-risk individuals.
ACRA calls itself the ‘only recognised Professional Association for company registration,’ in the UK and serves as a forum for those involved in the industry.
However, the organisation has been criticised for its number of corporate members who specialise in setting up shell-companies or similar ventures – popular with financial criminals and thought to have contributed to the UK’s declining AML reputation.
Director of Dark Money Files Ltd Graham Barrow told the ICIJ that the idea of ACRA members being involved in ID checks “could be seen to look like asking the fox to guard the henhouse.”
British financial crime consultant Helena Wood dismissed the notion entirely, saying that no company formation agencies should be entrusted with ID checking responsibilities because they frequently don’t follow through in practice. She labelled some of these agencies as “cowboys”.
Wood has called for a change to the UK’s company registration system in the wake of the British government’s admission that businesses are being set up at “record rates” in 2020.
The national corporate registry, Companies House, has admitted that this increase likely includes criminals trying to set up companies for COVID-related fraud, which National Audit Office estimates will claim “tens of billions” of pounds.
The UK’s financial reputation has suffered heavily in the wake of the FinCEN Files whistle-blower leak in September.
Information obtained from the US Treasury by Buzzfeed showed that thousands of shell-companies exist in the UK for the apparent purpose of assisting with money laundering.
The relative ease at which individuals can set company-types associated with financial crime – such as ‘limited liability partnerships’ and ‘limited partnerships’ – has been flagged as a reason why Britain has become a haven for global launderers.
One document released through the FinCEN leak showed that US authorities considered the UK a ‘higher-risk jurisdiction’ due to this.
In addition, a recent report from legal research and risk management firm LexisNexis has revealed that more than half of UK businesses are risking legal penalties for failing to comply with new AML laws, despite the fact that those new laws came into force on 10th January 2020.
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