AML warnings raised at a third of UK EMIs as ‘major gateway’ for illicit funds

Dec 23, 2021 12:00:00 AM

What has happened?

In December 2021, the anti-corruption campaigning organisation Transparency International UK warned in its published report, “Together in Electric Schemes”, that the payments industry could become a “major gateway” for illicit funds unless it is subject to stricter supervision, and that anti-money laundering red flags have been indicated at more than a third of UK-licensed electronic money institutions (EMIs).

What are the details of the warnings?

In its review of 261 EMIs licensed by the FCA to operate in the UK, Transparency International found that 100 showed potential money laundering red flags (indicating risk rather than proving actual wrongdoing). Identified concerns included owners or directors directly named in money laundering investigations or senior staff members or directors previously employed at institutions alleged or proved to have had anti-money laundering failings.

The review also found that 38 Russian and Ukrainian-language websites were offering to establish anonymous shell companies with accounts with UK EMIs, while EMIs were being advertised for sale on LinkedIn and other websites for between £600,000 and £1.5 million.

Transparency International also called into question in its review the overall adequacy of FCA supervision of the sector and issued nine recommendations in relation to this, including a recommendation for a thematic risk review of the sector.

How can we help with payment regulations?

If you’d like to know more about how we can help you with your EMI anti-money laundering arrangements, payment regulations or with any other regulatory compliance issues, our specialist financial crime team is here to help.

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