How vulnerable are IFAs to money laundering?

Independent financial advisers are weak when it comes to documenting proof of customer identity, training and awareness and the proper use of national (government) and international (Financial Action Task Force) findings as required by ML 5.1.2R. The FSA picked up these shortcomings in the course of cluster project work that followed its July 2001 report, “Money Laundering – Tackling our New Responsibilities”. On the positive side, the 30 firms reviewed by the regulator all had anti-money laundering arrangements in place that permitted rapid communication of staff suspicions to the MLRO and his or her timely consideration of reports for possible disclosure to the National Criminal Intelligence Service (NCIS). Although record-keeping was judged adequate and all firms carried out identity verification, the regulator found that many did not consider all that they knew about their client when detecting suspicious activity, which may explain the low level of reporting to NCIS.