26% of business leaders admit they have no knowledge of recent changes to money laundering regulation and what they need to do to remain compliant, according to new research.
The research, carried out by anti-money laundering service, SmartSearch, reveals the extent of business leaders’ and decision-makers’ knowledge of the new anti-money laundering regulations, how confident they are in their compliance and whether they plan to invest in anti-money laundering services this year.
Money laundering costs UK businesses, citizens and the government upwards of £190 billion each year. In January 2020, in an effort to tackle the rising levels of fraud and eliminate money laundering, the government introduced new anti-money laundering regulations under the fifth money laundering directive, which all UK businesses must comply with.
Fewer than one in three (28%) business leaders are fully aware of the fifth money laundering directive regulations and what they need to do in order to be compliant, while one in four (26%) admit they’re not aware of the new regulations at all.
Business leaders and decision-makers in the public services and administration sectors are the least aware, with over half (58%) saying they did not know about the changes.
The data shows less than half (46%) of business leaders in the accounting, banking and finance sector said they are fully aware of the updates.
Moreover, only a third (34%) of the business leaders and decision-makers polled said they would feel confident in demonstrating their business’s compliance with current anti-money laundering regulations, and one in five (20%) don’t know if their staff perform adequate Sanction & Politically Exposed Person (PEP) screenings. Checks against PEP and Sanctions lists are essential in order to protect a firm from exposure to the menace of financial crimes.
23% of those polled rated their understanding of their business’s exposure to financial crime, and how they can protect themselves from this, as very good. Without a thorough understanding of the risks, business leaders cannot put proportionate systems and controls, or appropriate up-to-date policies and procedures, in place. SmartSearch said that, essentially, business leaders are putting their business in jeopardy in both the eyes of the law and their consumers.
Despite data indicating a clear lack of knowledge, only one in five (20%) said their business plans to invest more in anti-money laundering compliance this year. This could be a direct result of their lack of knowledge of the new anti-money regulations, leaving many businesses running the risk of being non-compliant.
John Dobson (pictured), CEO at SmartSearch, said: “The new regulations were put in place in order to help tackle rising levels of fraud and eliminate money laundering, which has been a huge concern among UK businesses.
“However, it is surprising to see so many business leaders and decision-makers ignoring vital changes to the money laundering regulations, which can have a huge impact on their business. It is also worrying that business leaders do not understand their own company’s exposure to potential financial crime.
“There is a clear knowledge gap here that needs to be filled. We hope that this research will go some way in helping make business leaders to become more aware of the regulation changes, and encourage them to put investment in their anti-money laundering compliance at the forefront of their business plans.”