Member Article

Revealing the Hidden Danger: The Alarming Rise of Money Laundering

The Bank of England (BoE) has a rich history as the UK’s central bank and the eighth oldest bank in the world. As the epicenter of the UK’s financial system, it’s responsible for maintaining “monetary and financial stability.” To highlight the hidden dangers of money laundering, a group of individuals in morphsuits made a bold statement by infiltrating the BoE and taking on the personas of faceless money launderers. We explore the significance of this demonstration and shed light on the often-obscured world of money laundering.

In a bold demonstration orchestrated by First AML, washing machines filled with ‘dirty cash’ were used to drive home the point that anyone, anywhere can be involved in money laundering. With London being a notorious hub for this illegal activity, it’s estimated that a staggering £1m is laundered through the city every six minutes. Shockingly, this means that our very own surroundings, including the institutions we trust, are often unwittingly allowing up to £10m of dirty money to flow through their businesses every hour.

Illicit activities like money laundering are becoming increasingly effortless in the digital and crypto world. The recent washing machine stunt was a timely reminder of this fact, as new research by First AML exposed the mounting threat of cryptocurrency-related money laundering. Shockingly, 70% of individuals in the compliance sector have expressed their concerns about the growing likelihood of their businesses falling victim to this type of illegal activity.

The survey results have exposed widespread apprehension among the participants, with just over 40% admitting to having detected cases of cryptocurrency-fueled money laundering. Even more alarming is the fact that over half of those surveyed (53%) believe that existing measures are only partially effective in countering this menace.

The very essence of the crypto world is what makes it a haven for money launderers: anonymity. The ability to hide behind a virtual anonymous account is a dream come true for those seeking to launder money. It’s worth noting that, while not a cryptocurrency, the timing of these findings couldn’t be more appropriate. This comes as the Bank of England has indicated that it’s contemplating issuing a digital pound and venturing into the world of digital currency.

The digital crypto landscape has ushered in a new era of money laundering, where bad actors can operate with impunity behind a veil of anonymity. What’s more, these criminals are constantly innovating, making it increasingly difficult to keep up with their techniques. The survey revealed that keeping pace with evolving money laundering tactics (30%) is the biggest challenge in combating crypto-related money laundering. To effectively tackle this issue, AML technology and governance techniques need to not only keep up with but also stay ahead of criminal tactics, in order to unmask money launderers.

In order to address the growing problem of money laundering, it is imperative to establish robust AML compliance policies and systems. In 2022, financial institutions were hit with fines of almost £4.04bn due to their failure to adequately address money laundering concerns, with crypto companies facing a staggering 90% rise in fines. This trend is not surprising, given that the survey revealed that more than three-quarters of business leaders (78%) feel that their AML compliance can be improved. Over half of the respondents (51%) have faced penalties or fines for non-compliance with AML regulations, and a staggering 85% of businesses have reported negative impacts on their operations due to such penalties.

The recent stunt serves as a stark reminder of the harmful impact of money laundering and its growing prevalence. With increasing fines and vast amounts of dirty money passing through financial institutions, money launderers are able to operate without consequence, hidden behind a veil of anonymity. Cryptocurrencies have only made it easier for these criminals to continue their illicit activities undetected. This is a wake-up call for businesses to fully comprehend the serious consequences of money laundering and to implement the necessary AML procedures and systems to avoid falling prey to such criminal activity. By doing so, the faceless nature of money laundering can be unmasked, and we can begin to address this growing menace.

This was posted in Bdaily's Members' News section by Lucy Jefferson .