UK.biz ignores money laundering rules

No questions asked

By John Leyden, 6th April 2004

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Two in three of UK businesses are failing to comply with new money laundering regulations.

As a result, company directors are leaving themselves open to legal action and a possible two-year jail sentence, a BT-commissioned study warns.

The Money Laundering Regulations, which came into effect last month, require UK businesses to prove the identity of their customers when handling cash transactions for goods of £15,000 or more. Companies also need to log these checks.

Although the majority of businesses claim to be aware of the new legislation (64 per cent), nearly half of 150 execs quizzed by market research firm Coleman Parkes Research admit they do not have a defined and documented process in place for checking individuals’ identities.

There are marked variations in levels of compliance across different market sectors. Compliance is highest amongst financial services companies, with 62 per cent of stockbrokers and 55 per cent of Independent Financial Advisers (IFAs) already compliant. By comparison only three per cent of car dealers and 23 per cent of luxury good companies have checks in place.

More than one in four companies feel that the cost of compliance will mean certain transactions will have to be refused, and 13 per cent see it as a cost that will have to be passed on to customers.

Peter Gandy, head of Web Services at BT Global Services, said: "Our research clearly highlights that organisations are confused about how to achieve compliance, and that there is a worrying lack of confidence in identity verification systems that are already in place."

Even some of those who have implemented identity authentication processes (40 per cent) feel they could still be victims of money laundering.

But never fear - BT has the answer. Its online authentication service, called URU, is designed to help companies achieve compliance with money laundering legislation by establishing people are who they claim to be and logging checks. BT developed URU in partnership with GB Group.

Although the issue BT raises is more than a little self-serving it still bears consideration especially when money laundering allegations have been the subject of numerous police and customs investigations into IT resellers. ®