Half of UK finance houses handle dirty cash

The research reviewed 300 million customer records and uncovered instances of suspected terrorists, known drug dealers and fraudsters laundering money through UK financial institutions using aliases, joint accounts or associate names.

It is an offence under the Prevention of Terrorism Act 2005, the Terrorism Act 2000 and the Proceeds of Crime Act 2002 for firms to be involved in transactions that are the proceeds of crime, or are intended for terrorist groups.

Datanomic believes that up to half of UK financial institutions are already unknowingly in breach of this legislation. 

Adding to the legislative burden, the third European Union Money Laundering Directive (PDF) comes into force on 15 December 2007.

The directive requires financial services organisations to fortify their systems against money laundering by criminal gangs, known terrorists and others whose activities may compromise foreign policy or national security. 

Datanomic's audits typically reveal that around four per cent of an organisation's customers can be found on World-Check's Watch & Politically Exposed Persons List, and a quarter of these relate to financial crime.

For example, a recent review of 30 percent of customer data from a large London-based investment house resulted in seven Suspicious Activity Reports. 

Datanomic believes that financial services companies are sidetracked from spotting criminals by dealing with false positives produced by ineffective matching of their customer records with lists of known or suspected criminals and Politically Exposed Persons.

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