GATEKEEPERS OF MONEY LAUNDERING

Gatekeepers (Case example: Role of gatekeepers in facilitating money laundering)

The Organisation for Economic Co-operation and Development (OECD) publication, Ending the Shell Game: Cracking Down on the Professionals Who Enable Tax and White-Collar Crimes, highlights that, “White collar crimes like tax evasion, bribery, and corruption are often concealed through complex legal structures and financial transactions facilitated by lawyers, accountants, financial institutions and other ‘professional enablers’ of such crimes.”

The report was issued to ensure that professional service providers are aware of their responsibilities to identify, report, and avoid money laundering risks and to provide strategies for countries to take action against criminals who abuse their positions to conceal and facilitate illegal activity.

In January 2019, UK lawyer Ross McKay was sentenced to prison for seven years, stripped of his license to practice, and required to pay ￡1,450 in costs for helping organized criminals launder money via mortgage fraud. McKay also suffered personal consequences.

He damaged his reputation, lost his livelihood, and left a wife and three young children with no financial support for the time he was in prison.

The majority of professional service providers in gatekeeping positions, such as lawyers, accountants, and financiers, play an important role in the financial system and offer valuable legitimate services.

However, because these professionals provide a veneer of respectability and offer a level of knowledge and skill that criminals might not possess, they are often engaged and employed by criminals to facilitate their illegal activities. In fact, a criminal organization’s business typically mirrors that found in a legitimate environment.

Some gatekeepers unwittingly assist in this illegal activity. However, in some cases, they are complicit in facilitating and concealing their clients’ criminal activities. McKay was a “go-to,” or preferred, lawyer for criminals because he did not conduct basic KYC checks, including understanding the nature of the client’s business, inquiring about the source of funds, or understanding connections between the parties and transactions.

McKay conducted more than 80 criminal transactions that helped a buy-to-lease landlord use illicit money to fraudulently build a ￡10.8 million property empire.

McKay committed mortgage fraud by disguising the source of funds for property deposits and used nominee names instead of the names of the legitimate purchasers on mortgage applications.

McKay also was the in-house lawyer for a loan company that was a front to launder criminal proceeds. The company belonged to a crime lord who was convicted of drug dealing. McKay admitted that he knew the property transactions were being made to launder money and that he was deliberately dishonest in facilitating them.