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Flexible Workspace Operators Warned of “increasingly sophisticated” Criminality

"Investing in a sophisticated compliance team is par for the course from now on, it’s no longer a luxury"

That’s the view from Robert Duggan, Managing Partner at the London office of Mourant Ozannes, who took part in a video interview with Landmark Plc’s Richard Gill.

Duggan, a legal expert in offshore companies and regulation, discussed the challenges operators face as part of money laundering regulations and particularly where operators are required to acquire and record details about virtual office clients.

Part of the problem, as expressed by Richard Gill, lies in obtaining correct details of virtual office clients and ensuring the information is kept up to date: “In all areas of business we have become familiar with money laundering regulations, and regulations dealing with virtual or non-resident clients,” he says. “We’re required to disclose the beneficial ownership identities of our clients, but on the face of it, that’s not always easy to find out.”

However it is an essential part of the flexible workspace industry and one that, according to Duggan, is now a normal part of running a business.

“The reality is, criminality is increasingly sophisticated,” Duggan explains. “Money laundering is not an amateur game. It’s very sophisticated and it’s sometimes difficult to spot.”

The key lies in asking the right questions and understanding who you are dealing with. This is a critical part of Know Your Customer (KYC), a process designed to acquire and verify the identity of new clients. KYC documentation is regularly updated and circulated to all BCA Members, and helps operators – especially virtual office companies – ensure compliance.

Duggan states that we now “live in a high risk world” which is markedly different from just five years ago.

“You need to implement structures and strictures to ensure that you are doing everything you can, and a little bit more, to prevent money launderers and criminals from using your platform. Investing in a sophisticated compliance team is par for the course from now on, it’s no longer a luxury.”

Watch the interview in full here:

Of course anti-fraud measures are not confined to the workspace industry; it is a global, and growing, problem.

The City of London Police’s National Fraud Intelligence Bureau (NFIB) recently shared a number of anti-fraud alerts with the BCA containing updated guidelines on the latest criminal activities. Among them, the NFIB warned of:

  • Insider Fraud: Involving theft of company information, property or expenses from its own employees. Findings from the NFIB show that 81% of companies affected by fraud reported insider perpetrators.
  • Binary Options trading fraud: This was the most common investment fraud reported in July 2016, representing 25% of reports received by the NFIB. Fraudsters are now using social media websites and apps to target a younger audience.
  • Money Mules: Fraudsters target students to act as ‘money mules’ for the purpose of laundering illegitimate money, often using social media and email to connect with young people and dupe them into making fraudulent transactions.

These are just some of the most recent criminal activities to surface, and there are many more like them. Business owners must stay alert to potential threats – both on a corporate and a personal level – and report suspicious activity to Action Fraud or to the Police. As Duggan advises, fraud is happening all around us and it is essential to ask the right questions, be on the alert for unscrupulous behaviour, and always know your customer.

Learn more about fraud and fraud prevention here


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