and credit unions. The PRA formally assumed its responsibilities on April 1, 2013.
For tackling money laundering and countering terrorist activities UK works primarily through National Crime Agency 2013 (NCA) with an objective to build a single comprehensive picture of serious and organized crime affecting the United Kingdom. SOCA 2005 (Serious Organized Crime Agency), under which the United Kingdom Financial Intelligence Unit (UKFIU) folds, works with the financial services industry in its effort to arrest money laundering and terrorist financing. The responsibility FIU imposes on the financial services is to aid and support them in that effort. SOCA has been merged into the National Crime Agency since 2013.
Money Laundering Regulations – MLRO 2007 (Money Laundering Reporting Officer) expects all “Money Service Business or Trust or Company Service providers” to appoint a “nominated officer” for ensuring the KYC (Know Your Customer) norms as well as report any suspicious activity to the FIU. Interestingly, this requirement folds under the HM Revenue and Customs, who are the UK's tax authorities. Like we have seen in the United States, the tax authorities co-opt the financial system to ensure that not only is there no tax revenue leakage but also that antisocial activities and wrong siphoning of funds do not happen. There are other acts like the Bribery Act 2010 of UK, which is considered one of the toughest anticorruption legislations. Compliance teams need to ensure that the staff of their organization understand and comply with the requirements of this act in the spirit of good governance.
These two representative countries that we have chosen offer a couple of interesting insights:
• The vintages of the start of their formal regulatory regimes as we know them today are more than half a century apart based on the situational needs but today converge to a large extent on the areas of regulation.
• One represents a unified twin peak structure and the other embraces the multiple regulators model.
Example of a Self-Regulatory Industry Body
A brief note on The Wolfburg Group (WG – 2000) illustrates the influence a self-regulated industry body can have on setting standards. The Wolfburg Group and the standards it propounds is a good example of an industry body that has its say on the global compliance landscape. This group is made up of 11 global banks that have gotten together to develop standards and policies in the areas of Know Your Customer (KYC), Anti–Money Laundering (AML), and Counter–Terrorist Financing (CFT) (http://www.wolfsberg-principles.com/). Whether the member banks themselves adhere to these principles in letter and spirit is a separate conversation, which we will discuss under the real-life cases topic.
What is indisputable, however, is the fact that this group has set global standards in fighting financial crime along with those enunciated under FATF (Financial Action Task Force). FATF is an intergovernmental body established in 1989 set up with the objectives of “setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.” The membership of this group is 34 countries and two regional organizations covering most of the major financial centers of the globe.
Ensuring that the body of guidelines spelled out in various laws and regulations are conformed to is an important part of the compliance function; and, therefore, more often than not, in the formal compliance structures one sees countering financial crime as a separate subfunction within its overall structure. This will be discussed in greater detail in Chapter 6.
The European Union – Regional Regulatory Structure
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