Final preparations for MLD4; no more excuses (Part 1)
The June deadline for implementing the fourth EU Money Laundering Directive (MLD4) is approaching fast
If companies fail to play their role in tackling financial crime, they risk both substantial fines and long term reputational damage.
In recent years there’s been a significant rise in cases of financial crime in the form of fraud, where the perpetrator’s key objective is to reap financial gain; often to fund terrorism and organised crime. Once funds have been diverted by a fraudster, they need ‘laundering’ to be useful. This involves creating layers to ‘clean’ the funds, sometimes using multifaceted structures, such as networks of accounts either from money mules, synthetic identities/businesses and complex corporate structures to facilitate the process. Companies can no longer ignore the fact that the fraudster and the money launderer are experts in their field, and extremely motivated to gain a financial advantage from their operations. These are not super human intellects; they’re just highly motivated for a cause, whether that is to finance terrorist activity or their lifestyles.
In response to this growing issue the EU created the fourth Money Laundering Directive (MLD4), which will be significant to all regulated UK businesses. In particular they need to alter the way they handle politically exposed people (PEPs), with MLD4 now incorporating domestic politicians into the mix.