Effect Of Anti Money Laundering Legislation
According to the House of Lords (2009) money laundering is defined as a process through which a particular source of an overwhelmingly acquired wealth and property suspected to have come from a criminal act is granted a perception of being legitimate and legal.
Money laundering is very popular when it comes to the concealment of criminal issues as the basic requirements for this is merely the concealment of the true origin of the wealth, the total authority and control of the criminal over the wealth and the capacity of the owner to change the form of the wealth and properties for concealment purposes (House of Lords, 2009).
In the UK for instance, an estimated yearly amount attributed to money laundering has an estimate of £15 billion annually. What the European government is worried about is the increasing amount of undetected and unexplained assets and capital amounting to such which may likely be used to set up organized crimes and terrorism activities (HM Treasury, 2007).
Dun & Bradstreet (2009) states that in the UK, the anti-money laundering regulations which recently became legalized was very controversial despite the government’s aim of securing national protection against crime and terrorist activities within Europe. Basically, the main principle behind the legislation of the anti-money laundering law in the UK and the EU member states is to finally put an end to the increasing popularity of illegal activities freely committed by any individual or even groups of criminals and terrorists within and outside of Europe.
Beginning from the United States issuance of the anti-money laundering legislations for their own country, the EU also released its own version in the year 1991, many years prior to the eventual legalization of the Anti-Money Laundering Regulations in the year 2007 (Dun & Bradstreet, 2009).
But despite all these developments and initiatives by the European government to battle against quite a number of money laundering cases, the question still lingers on whether the UK and EU legislation of anti-money laundering regulations are effective in achieving its aims of fighting against and countering money laundering in Europe as well as limiting organized crimes and financing terrorism (House of Lords, 2009).
Objectives of the Study
This research proposal entitled the “Analysis of the Content and Effect of Anti Money Laundering Legislation in the UK and the EU" aims to carefully evaluate the impact of the legislation of the Anti-Money Laundering Regulations in the UK and the EU.
In particular, this research proposal will carefully assess whether the legalization of the Anti-Money Laundering Regulations in the UK and the EU has significantly addressed the problem on terrorism and organized crime financing. This paper will also explore the impact of the Anti-Money Laundering Law on businesses and the overall economic situation of the European countries, that is, whether the law set certain important limitations among businesses which served as a barrier for business entities to function well.
Significance of the Study
The European government decided to permanently transform the existing Anti-Money Laundering Regulations into a law in order to display its goal of limiting the cases of terrorism and organized crimes within and outside Europe. Nevertheless, there are certain disadvantages that the government has to face in the implementation of this law as the same law managed to increase the cost and efforts required from the private sector like the private-owned businesses in their compliance with this new law on anti-money laundering.
Given certain dilemmas involving the businesses and the private sector on the newly implemented and legislated anti-money laundering law, there is a strong need to evaluate whether indeed the UK and EU’s anti-money laundering law resulted to positive or negative impacts not only in the public sector but also in the private sector.
The Impact Anti Money Laundering Legislation in the UK and the EU
According to Dun & Bradstreet (2009) the aim of the European government is to address the current issues on money laundering and its direct link to terrorism and organized crimes through the process of criminalization of money laundering and the adoption of various legal measures with the aim of identifying, seizing and confiscating wealth and assets produced in the crime.
Nevertheless, despite this great motivation and positive goal in accomplishing this task, certain disadvantages and negative impact were still manifested as the results of the anti-money laundering legislation in the UK and the EU. In the private sector for instance, the various businesses experienced an even bigger responsibility of preventing, detecting and reporting money laundering acts they encounter (Dun & Bradstreet, 2009).
Also, Dun & Bradstreet (2009) states that the new Anti-Money Laundering Law established in the UK and EU greatly affected various financial and law institutions. This is because the law now sets limitations on engaging in business transactions involving high value goods. For instance, any business transaction higher than €15,000 has to abide and follow certain rules and regulations in order to avoid the risk of being charged against this act.
Moreover, the new Anti-Money Laundering Law established in the UK and EU requires businesses to greatly assess and evaluate their partners, customers and any person or group of individuals they are engaging in transactions with in order to identify the potential amount of risks involved in transacting with that person (Dun & Bradstreet, 2009).
According to the House of Lords (2009) it is clearly stated in the newly legislated Anti-Money Laundering Law the Customer Due Diligence Measures or CDD which states the following regulatory actions and policies that private business owners must conduct when it comes to the establishment of business relationships which include the following:
The identification of the consumer and verification of his or her identity based on accurate reliable and online based data
The identification of the origin or beneficial owner as well as the verification of his or her identity based on the control and ownership of the assets used in the transaction
The obtainment of the purpose and information with regard to the nature of the business transaction and the establishment of the business relationship and finally,
The close and direct monitoring of the business transactions in order to spot on possible risks that may be involved within the transaction process.
All of these requirements were explicitly included in the newly legislated Anti-Money Laundering law in the UK and the EU which creates a burden and great responsibility on the part of the private business owners in order to achieve the aim of limiting the possibility of existence of financed terrorism and organized crimes within Europe (House of Lords, 2009).