Venture capitalists alert

The British Venture Capitalists Association (BVCA), which represents UK private equity investors, who have invested UK£43 billion since 1983, issued guidance on money laundering to its members in November. Its task force on funding recommends urgent review of recording and reporting procedures, the provision of mechanisms to resolve internal conflicts of interest that may arise between MLROs and executives who may have suspicions about a counterparty but are concerned to report lest a deal falls through, and strict due diligence on introductions by intermediaries, sources of funding and co-investors, paying due attention to blacklists of individuals and jurisdictions. Edmund Truell, BVCA chairman, said that members should be aware of the risks and law although he thought that the sector “is not the most obvious home for illegitimate proceeds of crime or terrorist activity”. Its very long investment time frames and relative illiquidity – the absence of money transmission facilities and generally restricted opportunity to transfer beneficial proceeds other than to the original investor – discourage many launderers. However, Mr Truell recognised that the Bin Laden network had built up a complex structure with major funding, which he described as “not atypical” of larger criminal and terrorist groups. They tend to develop into “quasi-commercial organisations”, which apply the same investment criteria and expect the same returns as legitimate firms. “Nor are their time frames necessarily short,” he said.