What’s the Buzz? The Official HiveRisk Podcast. Dirty Money Close to Home: AML Risks in our Communities (with Harriet Holmes)

Full Transcript:

Kate Burt: Hello and welcome to What’s the Buzz? The HiveRisk podcast looking at everything that’s hot in law firm risk and compliance. My name is Kate Burt, I’m a solicitor and founder of HiveRisk. Together with my team, we’ve been looking after law firms from all different shapes and sizes for the last 10 years. Through these webinars, we will be bringing you everything that’s hot in law firm risk and compliance. So without further ado, let’s get into it.

Eloise: Butterworth: Hi, welcome everybody to this week’s episode of What’s the Buzz? The HiveRisk official podcast on Dirty Money Close to Home: AML Risks in our community. I’m just going to give a couple of minutes for our live audience members to filter through. And I am delighted today to say that I am joined by Harriet Holmes of Thirdfort. I think probably everybody listening to this podcast will already know Harriet. But for those that don’t, I’ll let you introduce yourself, Harriet. Yeah,

Harriet Holmes: Yeah, cool. Thank you, Eloise. And thanks for inviting me. I’m really excited for the topic of conversation. And we’ve already had lots of great chats before. So yeah, for anybody who doesn’t know, I’m Harriet Holmes. I currently work at Thirdfort as a subject matter expert, supporting on all things Thirdfort internally, but also supporting our clients with understanding how technology can fit within their processes and what they need to be thinking about and doing quite often. And for many of you, I’ll have seen you at some of the conferences and the events that the Law Society run probably most often. Before joining Thirdfort, I’ve held different roles within law firms, advising on all things AML, be that in consultancy or in the coalface being an AML analyst from when I started out.

Eloise: That’s great. Thank you so much. And I’m so excited for today’s session because when we were talking about, you know, prepping for today and what we wanted to talk about, obviously, we spend a lot of time talking about policies and process and controls and effectiveness and all that techy stuff that like obviously is so important to the day job, but rarely does the why that sits behind everything that we do as compliance professionals get dedicated air time, like not three minutes at the start of a training session to try and grab the attention of of who you’ve got in the room, but really, you know, dedicated time getting into why this matters because at the end of the day, 12 billion pounds is laundered through the UK economy every single year. Like that’s an astronomical sum. And then of that sum, it’s estimated that 1 billion is laundered through the high street.

So we’re not talking about, you know, inner cities here, we’re talking about rural communities, we’re talking about, you know, communities where you and I and our listeners live. And I think it’s convenient to think, well, it just doesn’t really happen around here. It doesn’t really happen where I live. But what we’re going to get into today is the reality that it does and that money laundering shows up in high streets with SME clients in local transactions, and really understanding how that would manifest locally and what we’re looking out for, the human impacts of that.

And I’m really getting into some real life examples of what you can be looking out for and how you can use that. And because we’ll have a lot of compliance professionals on the call today, but I’m hoping that this will be an episode that they share with their firms, you know, how you can get these conversations going and why these things matter.

Not because the regs say you’ve got to do it, but because what do you want to be a part of, or potentially facilitate being a part of, you know, where you live. And I think that’s what we overlook, isn’t it?

Harriet: I think it’s an interesting one, isn’t it? Because I think we started this conversation around like, why did we get into this? And like, for me, I probably fell into AML. But when I say fell, I think that’s an interesting one because I didn’t necessarily know that there was a career that I could make out of anti-money laundering.

But I always had a fascination long before that with crime, with documentaries, with understanding kind of criminals and what they were up to. And that kind of started with the idea that maybe I might go into law enforcement. So maybe fells are not the right words. There was always a curiosity, around that kind of world and how that kind of played out. I’ve always loved watching either the fictional or the factual documentaries where they follow, like the police forces. And I think that’s a really great place to start this from in some ways because actually curiosity is the best thing when it comes to understanding the why and the why that we do everything that we do day to day and why we have a policy and why the regulator is so interested or why is government so focused or spotlighting this quite often now. For me, that kind of is where it starts. And I think actually jokes aside, we decided on this topic, if anybody believes us, way before this week. And we’ve been talking about it for a few weeks that this was a session that we wanted to do together. But actually it couldn’t be more timely than this week, which is great for us. And a total coincidence that obviously the government have released a new initiative, really focused on the high street. It’s laughable in some ways that we had this session pencilled in because it literally talks to everything that we wanted to talk to within here about actually, if there’s a billion laundered in the high street, all of our villages, and I often use my own as an example, have these types of businesses on them. You only have to walk down a high street to see or to see the empty shelves of businesses that potentially could be exploited.

Or you can see actually these, I mean on my high, my little village and it is a little village. I think there’s four barber shops just on the one street and the street’s not that big. If I could show you on Google maps, you might appreciate how many that actually is for such a short space of land. And I think that’s quite fascinating, isn’t it, in itself.

And I think one of the things that I always said in AML training when I was doing it for law firms was actually that your curiosity starts there and the world that’s around you and actually that local knowledge that you’ve got actually becomes a really powerful tool when you’re thinking about anti-money laundering, when you’re thinking about conveying to your team the why, that can be really important.

And so just to touch on, I mentioned it really quickly there, but just to touch on the initiative, the home office and the National Crime Agency have announced this week that there’s a new 30 million and a 3 million crackdown on this dodgy high street shops that they keep talking about. And we’ve seen a lot of stuff come out about this in the last year or so. Law enforcement did a really big operation. It saw 2,734 premises that were raided or visited as part of that, 924 arrests, and 13 million or above that, suspected criminal proceeds that were seized or restrained, and 2.7 million of illicit commodities that were destroyed. So that’s like your fake cigarettes, your dodgy vapes, all of those things may be, thinking about other examples, fake goods like where they’ve done knock-offs of, often think about the t-shirts, there’s a local seaside village not far from me that often gets raided for the fake designer wear, that’s what I’m looking for.

And I think that’s really interesting when you start putting these numbers out there and you start seeing them, like you mentioned at the intro, 12 billion of criminal cash generated in the UK in a year alone, 12 billion, I mean I don’t know how you would even picture the size of that. And I think for me for this session and the really interesting part is like why does that matter for me if I’m working in a law firm or another regulated environment, for me that’s a real clear sign, given the government were putting 30 million of funding into this, that economic crime is only increasing, like it’s only getting to be more of a problem and there is arguments that it’s always been there and now maybe it’s just a spotlight but I think we can see that it is growing. And for me that reinforces that we need strong due diligence, we need strong processes in place to kind of even meet them halfway in some ways, we need to be thinking about source of funds, source of wealth, KYB because we’re talking about businesses, we’re talking about fronts here, it underlines all of the things that we try and do day to day and I think that’s really powerful.

 I don’t really want to jump in there, I feel like I’m put forever on it, it’s one of those topics that you could just keep going.

Eloise: Yeah and I think we can sometimes and I don’t want to generalise but obviously you and I speak to a lot of people in the industry, you know there’s a lot of people that will say it’s not my job, it’s someone else’s job or being honest do I really care? All right but what we’re boiling this down to today is actually you should care and if you can’t get that message across in the context of a property transaction and source of wealth, ask yourself what is in those illicit vapes that are targeting kids in your community, why is it the schools now have to give education and training to your kids on county lines drug dealing and the implications of all of this for the community, for the vulnerable, for the people that have fallen on hard times and are going to be exploited by these criminals, for the wider implications.

Yes it might be a property that’s acting as a front to launder money, that money might have been laundered from underage girls being sex trafficked, like are you telling me you don’t care about that? I don’t think you are but the dots don’t always get joined because understandably the pressures of the day job and the narrative that quite often accompanies, you know money laundering regs, our requirements, CDD, tick box compliance, you know I think sometimes that messaging which is incredibly powerful gets lost in all of the noise and I don’t think any person listening to this today or any firm or any law firm owner wants to think actually yeah we how would you do that?

We you know inadvertently facilitated something like that happening where our office is based and I think that big picture piece albeit legal is only a part of that it’s just one piece of the puzzle but I don’t think we can just say it’s that’s not our job that’s the bank’s job or that’s trading standards jobs to make sure those shops you know get shut down or we could get very siloed in that thinking wouldn’t you say?

Harriet: Yeah definitely there’s two things I want to pick up on there so you mentioned trading standards now there was a really interesting article that came out at the end of April and I think this highlights to me why this matters to me and my community and as a mum and as a sister as a daughter all my family live in like in my village like we all live quite close to each other and if something was to happen to one of them you would definitely you would care and I want a place that is safe having young children to grow up in you don’t I don’t want to be having to worry about some of the things that potentially we are worried about because these criminal gangs that are operating these fronts or these businesses they’re like they’re dangerous like and that’s not something that I’ve just made up but this article from the end of April that talks about trading standards and as part of this work and part of the enforcement that’s been going on obviously they’ve been heavily involved with the national crime agency and the local police forces and then within that article there’s 24 testimonies from officers and they describe really serious incidents that really demonstrate how dangerous these gangs are that are running these front businesses and whilst money laundering is one element money laundering is funded by crime and it’s funded by underlying things be that drugs modern slavery lots so many different things fraud lots of things can go into feeding money laundering like there has to be dirty money at the start for money laundering to even be a thing that we’re talking about and the serious incidents that they describe are things like sexual harassment assaults threats of rape threats of murder weapons that were found in the premises vehicle trackers attempts to run over officers like they’re pretty staggering.

These are people that are doing their job again these people didn’t work for trading standards they’re going to live in our communities like when we see the police officers like that everybody’s doing a job do you know what I mean everybody’s trying to make a difference in their own way and nobody kind of deserves to go to work and be put at that risk for all of these people they might not be related to you or maybe they are but they all live in our communities like often if they’re doing enforcement in an area they’re not going to live that far away and so it matters to them as much as like when we talk about why we’re involved in AML and why we all turn up every day and give our 100% for our firms like they’re all doing the same and I think it’s just pretty scary that these criminal gangs are willing to go to these lengths or these extremes and that that that for me gives shows a real clear line as to why we should all care and why this is so important of a conversation to be having.

The other thing was you mentioned about it’s not my job, a really interesting read that came out last week was from a gentleman at the FCA and it was on working together to get to fight economic crime and obviously we all know of the pending direction that supervision is going and we’ll not go into that at all, but I think it’s interesting to stay close to the communications that are coming out from the FCA. Within that speech it actually talks to having a very aligned conversation to what we’re having today and it talks about criminals not operating in neat silos, they don’t just operate and target one business one law firm one bank that’s not how it works in real life.

So our response to that can’t operate like that either we can’t just pass it off to someone else because that’s not what a criminal is going to do they’re not just going to say well I’m not going to do that today and the FCA are calling on this idea for a more system-wide approach built on better information sharing smarter use of like technology deeper collaboration was a big shout out within that speech and that’s not just from law firms but all like all regulated companies but also the government law enforcement the regulators themselves and I thought that was really interesting that that was a real core part of that speech it also did talk about the impacts on individuals in communities it talked about the fact that this is not victimless that often the ripple effects that come from victims of money laundering are far reaching and it’s not often just the cost which is often a perceived thing is actually like oh well the bank will replace the money for a victim and they won’t be out of pocket, they won’t be out of pocket they will be able to recoup that money and that’s often only part of it. There’s a lot of like psychological impact that can be there it can actually play into so many things like if if you are a victim you can get markers against you you potentially might struggle to remortgage or be able to afford your mortgage, and you can see how that would ripple out for the people that are kind of are the victims and I think yeah I think that’s often quite misunderstood that it is this idea of there isn’t a victim.

Eloise: Yeah I agree and I have you know I revisit this this point and this thought frequently and and I question whether we do that to make ourselves more comfortable around the topic, or what really really drives it because underneath the regs and underneath the requirements and underneath your firm’s policy you know we’ve got human behaviours in all contexts here the human behaviours of the individuals involved the human behaviorus of the victims the human behaviours of those that are in roles where they have they have some part to play in disrupting this process, and yes the topic and the scale is almost incomprehensible and incomprehensible and 12 billion pounds I just can’t you know it’s such a sum but micro actions compound, and if everybody at every touch point of this from education from law enforcement from supervision from government from regulated professionals you know from society as a whole if everybody undertakes and or their micro action then that compounds to real significant and meaningful change. It’s easy when something seems overwhelmingly big to be like well I can’t change that just me in my role like I’m not you know I don’t wear a cape I should but I don’t you know I can’t independently fight crime all on my own but those micro actions I think it’s important not to underestimate the impact of those and and the real shift that they can have.

Harriet: Yeah, I mean if we if everybody turns a blind eye there’s never going to be a change if everybody says my my correction is not enough then this what what we said at the start about the 12 imagine what it’ll be next year. If law enforcement said oh well it’s not my problem and the trading standard said oh it’s not my problem and nobody made any any changes if every law firm says the same and every bank says the same the criminals you just I mean this… Is with us having and starting to you know that number like it’s not that nobody’s been doing nothing for the last year two years ten years like systems have been in place like the money lodging regs have been around a fair while um pock has been around even longer so people have been doing stuff law enforcement have been taking action for a long time yeah there could be arguments out there and depending on who you listen to everybody could do more but it’s not like nobody’s been doing nothing either and we’re and we’re still at 12 billion so you could imagine, I actually can’t imagine what it would be if everybody said my micro action doesn’t make a difference because actually I think you would see quite quickly it would it would I think the number would go off the scale from I don’t know what it’d be.

It’s it’s hard to imagine isn’t it that’s that’s the point it’s hard to imagine that if we all took that attitude actually what would that number be that will have it when he would that be

Eloise: There are you know stories in the local press there’s stories in the national press and I’m not talking about the huge headline grabbing stories that can feel difficult to relate to you know, albeit I think let’s call it a lot of ML geeks on this call so probably you know we are interested in those but looking at your local press your local police force what because nothing really brings it home in quite the same way as… Actually I walk past that mini mart I walk past that mini mart when I go to so and so on a Saturday morning for my coffee um and you know and we we make light of you know we call it curiosity but you know just our pure nosiness right Harriet um and I mean I’m guilty I’m walking down the road and my husband’s looking at me thinking oh she’s on it again she’s talking about fronts because she’s seen another business pop up and you’ve said it yourself the shelves are empty there’s like one you know one product deep on each row and in the back of my head I’m thinking well you’ve got business rates and you’ve got staff to pay and there’s no one in there and I’ve never seen anyone in there and you don’t really have any product to sell so what are you doing

Harriet: Yeah yeah definitely is it it is a really hard one isn’t it when you but actually local police forces are great and like I actually follow quite a fair few I’m not sure that’d be surprising to anybody but AI makes it super easy now as well like actually you can do it pretty reliably um you can set up like a mini agent that even scans it for you um they all have news pages and they also all post on social media too so maybe not your linked in but I follow my local police forces on Facebook um I follow like the top level and then I follow like my local area because actually that that shows me just how close the drugs are um to actually just my little little patch um beyond like the city kind of idea as well um and I find that really helpful for serving me quite quickly with it being in a social media format but then you can do it more firmly like I say you can go on their news pages um yesterday in preparation for this I was playing around with um AI and I asked it to find me um I gave it my local police force and said find me in the last year how many times things like money laundering have been mentioned the proceeds of crime and I gave it a bit of a prompt as to what I wanted it to pull and it pulled me a list of articles from their website with the official source links so that I could check it that they were real um and they weren’t just made up ones for um my question um but it’s really easy to be able to like self-serve that information now in a quick quick way as well and I think they make really great training materials for your team um if you live in a different place to your office as well make sure you follow the office one because again if you’re talking to your team you’ve got that commonality of a base um take them to meetings just chat over them and say look I saw this encourage people to bring them to the table as well so it’s like if you’re the leader of the team don’t always let it be you that’s bringing them in ask other people like if you read something like let us all know about it like we’ve all got that same level of curiosity we’ve all got I think a level of nosiness if you work in AML it kind of comes I think a little bit hand in hand um with a good skill to have um and it’s not a bad thing um because nosiness is often led by curiosity it’s not you’re curious about actually let me have a look let me learn a little bit more like is there something we can take away here is there something that we can see in this story that actually had this been something that landed in the firm would we have spotted would we have picked up on this actually that’s unusual um if you see this um and there’s lots of good examples and if you if you deliver AML training I’m sure you’ve got your own pack of um cases or examples that you’ve kind of seen and that you can pull on um I’ve got a particular one in Manchester because um even at third fort I still do train I still talk about AML a lot in my firm and we have an office in Manchester so I often look out for things that are local to them again to get them interested in the why we have an AML technology product um and we talk a lot about that and there’s a case in Manchester for a gentleman who was actually sentenced to 37 years in prison so it was a pretty significant case um that went on but it talks in there about him falsifying his earnings he presented himself as a legitimate businessman but actually on paper he didn’t have any evidence in his bank statement of any kind of formal employment but he managed to get mortgages um he managed to own a high value property um how he did it will be left unsaid.

I’m sure but the article’s great for kind of being able to pick out those things pick out on key things around how he framed his lifestyle how he was able to get through all these processes with this veneer essentially um yeah I think that you can find your cases you can find old ones as loads are out there but you can also find those new ones and that’s what following your local police force will enable you to do and I think AML training’s an interesting one isn’t it in itself because quite often firms will do it like once a year they’ll do it annually but actually some of this is that continuous learning it is just that continuous conversation because actually once a year is probably not going to be enough to really embed what you want to embed but you also need to take people on the journey you need to make them feel that level of like I mean people always look at me I was going to say excitement but it’s people I mean you think not everybody gets excited about AML and after remember that but you have to build that level of curiosity excitement you have to bring that energy to the table so that other people feel as energized and as confident to bring these examples when they read them as well to the team and they don’t always have to be real examples from in your firm because I know a lot of people are quite particular or precious about actually well I don’t want to tell people about that case or that near miss which we always encourage and this is a really great way to be able to support people in really understanding what’s going on in the world and having those internal chats.

Eloise: Yeah I agree those sorts of I think there’s this misconception that to be training you have to be sat classroom style there needs to be slides there needs to be significant amount of groaning from attendees it’s mandated and I see that and when I ask firms about training during audits and things that’s where their mind goes and then actually you know I’m like but do you do any email updates do you ever like attend team meetings and talk about these things do you do like coffee and a chitchat fireside chat about particular issue and I think the news articles or topical news articles local news articles are a really good way of just bringing it to life because if you’re doing annual AML refresher training like there’s so much of the mandated like I need to tell you x y and z during this hour and that’s going to take up time even though x y and z might not really make you any better at spotting these red flags and these are the sorts of things where you see the light bulb moments and you’re thinking well you know the the mini mart that sell the cigarettes and the vapes or whatever it might be it’s just about cash isn’t it it’s just about cash and we don’t take cash so I you know I’m all over the risks of that but actually it’s but where does that cash go it’s what’s in those products why are they illicit products what are the health implications what are the safety implications what are the it’s not just oh well it’s cash and our AML policy says we don’t take cash so I’m not worried it’s the touch points for the legal sector how did they acquire the business how did they acquire the premises or the lease or how’s it being paid or you know what what company structures are being set up we did an episode a few weeks ago on company’s house company’s house risks and phoenix companies and um companies that set up are in existence for 12 14 months and then they get you know they don’t file anything and they disappear and then they go again this is all interlinked to these types of businesses and and that will show you the scale of the issue that law enforcement face in terms of unpicking who actually sits behind these businesses and it’s a sobering thought really it

Harriet: I mean there’s a lot to unpack there in what you just said isn’t it like it is about the why and the first why’s never enough um there’s that say there’s a model isn’t there where it’s like five wise deep keep going because if you only scratch the surface something can look legitimate and unless you are curious unless you ask yourself the why well why is that business operating with all of this staff essentially with nothing on the shelves how is it still open every time I walk past well why is that like and you you can’t go surface level deep on on that because actually you miss uncovering what’s underneath the the rock um and again I think it’s a fascinating conversation isn’t it when you start to think about it but seeing these articles online seeing these big numbers I think it really is eye-opening to the scale um and I mean and where is that billion pounds so we said a billion’s laundered on the high street where is that now because it’s got to be somewhere whether that’s under somebody’s mattress whether that’s in the bank account whether that’s now owning a house that billion pound sits somewhere in our economy and there’s somebody probably waiting to use some of it because law enforcement haven’t confiscated the whole billion as far as I know unless anybody wants to send me the article that lets me know they have um so that means it’s somewhere and that means it could be in your transaction tomorrow.

Eloise: We just don’t and I think it’s being realistic about um our own bias our own misconception our own ability when under pressure to perhaps make some convenient assumptions about those why questions and and I think you know the more you educate yourself on the realities of the risk and you’re educating those people that are dealing with this on the day to day the more that um that approach gets refined and you have a better understanding of what you’re truly looking for because as you say stories keep hitting the headlines be it UK or overseas criminals investing in high value properties or whatever it might be in the UK somewhere someone should or has done sorts of funds checks in respect of those and and what hasn’t hasn’t happened and what hasn’t hasn’t got picked up um and I think that shows that one why those checks are so important um and so necessary but also the work that is still there to be done because I think a lot of the um shortcomings by firms when it comes to especially source funds and source of wealth it’s it’s not um a lack of care it’s more inadvertent than that but that’s not okay um and that’s not you know not the standard that’s expected of us and we can’t have that happening due to a lack of understanding or a lack of education because all of this data is out there um and I think the numbers we’ve quoted a couple of them that were in the national risk assessment released last year the numbers are staggering when people say oh but there never actually is any money laundering in any of these transactions and I think that feeds a really unhelpful narrative about this

Harriet: Yeah I think another thing to say on that though is don’t be afraid to use your local knowledge like often our offices are near where we live we spend a lot of time often at our offices we know the local area really well like and actually that’s powerful it’s pretty like it’s gold dust in in some ways and I think there’s a a fear that people think well I that’s my I know that from like my personal life or I know that from like living here for 30 years or whatever it might be and then they kind of box that and then when they’re in the work mode it’s like they don’t tap into that always as well and I think it’s like you can use what you know and what you expect and I often say the same when it comes to like source of funds and source of wealth like we’ve we’ve all got family and friends around us they’ve all probably got different occupations we’ve probably got a rough idea what they’re earning what’s normal how long it’s taken them to get to this point in time we’ll have a rough gauge you might not know the exact pound and pence kind of idea but you’ve built up a lot of knowledge like.

I think a lot of people kind of box that and don’t necessarily use it when they’re doing their risk assessments when they’re thinking about these businesses that are presenting to them when they’re thinking about these individuals that are coming through the door actually feel confident to use how how you’ve built use that that that’s your really good like usual instinct like you’ll have a feeling like and I think people sometimes don’t give themselves enough credit for what they already know and what they already have um and if that makes you feel uneasy and you ask a few more questions and you still feel uneasy feel empowered to escalate it speak to your manager speak to your money laundering reporting officer and explain that you know somebody who’s in that in this role and actually this present person’s presenting with much more wealth than you would have imagined them to have had and or you are aware that this shop operates on this high street but you’ve walked down there because your dentist is five doors down and every time you do it makes you wonder about and you’re curious don’t don’t ever feel like you can’t use what you know about an area or an occupation or something actually that’s going to become really important and integral um but I don’t feel like enough people are really confident to to always do that because they’re like oh well I don’t know it professionally or I’m like actually like and I can’t I can’t be using that bit about that because for whatever reason and they kind of like build it in the heads um that they can’t I think it’s a really important piece to kind of make sure that we’re building in any local knowledge we’ve got making sure we build on that and make sure that comes into our risk assessments.

Eloise: And that question does feature on risk assessments often you know I see it frequently you know where where’s the client base is it local to the office this kind of community knowledge is as you say invaluable I had a very specific example referred to me quite a few months ago now and on the face of it I was like oh why are you suspicious about that business it wasn’t a business on paper jumped out to me as something that would be a red flag actually they said oh because it’s local to me and I know they only take cash they don’t take car payments and it wasn’t one of the usual it didn’t fit within the examples in the AML policy but she applied her local knowledge which I didn’t have because it was miles away from me um to contextualize why she had you know on the money concerns um about that business and why she thought she needed to take a slightly different approach then maybe it would look like you need to take face value.

Harriet: yeah that’s really cool.

Eloise: It’s like a good example to think about just for those that are dropping in questions we will make available after the session the recording and we will also um set a couple of the articles that we’ve referred to today because there’s quite a lot of interest in in terms of um finding those so we will put those together for our listeners that are live and have signed up and then circulate those to everybody and so I mean there’s so many points we wanted to cover today in this session and and you can really go down the rabbit hole with this.

I was down a particular one in relation to cash careering um and and uh you know literally people moving between these different establishes establishments with backpacks full of cash collecting and depositing and and moving it around and we’ve touched on the brazen nature out which this is happening in the high street highlighted in that trading standards article that that you mentioned and there’s quite a few there’s some really good um BBC articles there’s um you know investigative stuff by channel four like that really brings this to life this is not a case of you know circulate a 24-page article to all of your team and ask them to read it and expect them to engage this is working out how you can make this messaging really land inside your law firm and and something that I was um shocked by rightly or wrongly um is the prevalence of money mewling and and we talk about it a bit and and I’ve talked about it online um but it’s not it’s not the forefront of the conversations that we’re having in my experience in your firm aml and the numbers are um staggering and that’s the numbers that we know about

Harriet: Yeah definitely and I think the thing with money muling is again when we’re thinking about training and we’re thinking about source of funds and source of wealth actually there’s really clear things that we can take out of the stories on money muling that we can look out for that we can educate our teams to think about around how the money comes in and how it goes out the names of third parties so all of these things that we’re talking about are to try and inspire like those kind of conversations internally and there’s lots of great stuff on money mewling um out there and you don’t have to look too hard there um and we can share this after there’s a really great vice video um a bit of an educational piece where the reporter goes underground is that the right term um where they come out and they speak actually the recruiters for money mewling come and speak to him um they’re not long videos but again you can bring these to your team you can sit down together watch them together and then do the conversation that comes naturally off the back of it a little bit like we’re doing um in today’s session.

Do that with your team um you can do it in big teams or actually you could just do it in smaller teams you can encourage your managers to do it um but when you talk about the numbers um i did have a look at the fraudscape report for 2026 um and actually that reports that in 2025 there were more than 22,000 incidents of money muling that were reported to the national fraud database um and they’ve actually included a new filter now when reports are made so that they can capture this uh money mewl one so that we’ll be able to see this trend if you want to call it that whether how it how it kind of moves whether it grows um it’s becoming much more of an area of focus within that report for them to actually include a whole section on it um 89 of those related to personal bank accounts rather than business bank accounts and actually one of the things that i found quite interesting was that a notable share of those reports actually sat within the age demographic of 21 to 30 and actually that was 39 so often when we talk about money mules we talk about students and we hear a lot of education that universities do when students start often there’s a big push in September um obviously with the new influx of students where there’s lots out there there’s lots of conversation flying around i think that’s where i see it most um trying to make sure students are knowledgeable on money muling and the risks and again when we talk about that victim when we talk about the impact if you get caught up in money laundering be that um i did read in this report by choice some people are willing to sell their information or whether you don’t realize and you inadvertently become a money mule without realizing the risks actually those risks on an individual basis are pretty staggering never mind the 14 years in prison actually, I want to say more life impacting decisions I’m not sure there is anything more life impacting than going to prison but real life things like not being able to get a mobile phone contract not being able to pass your verification if you want to rent maybe affordability on a rental property applying for a mortgage a credit card like the things that it’s going to impact in your life if you get a fraud marker if you have your bank account closed because they’ll freeze your bank account but people don’t necessarily appreciate those risks and they’re very impactful if you think about you’re not going to be able to move do you mean that your life essentially if you don’t have a bank account your employer might find out.

Eloise: It’s huge isn’t it yeah and there’s this misunderstanding by significant amount of of the of communities that that there there’s nothing illegal about money muling.

Harriet: Yeah in the report itself um it actually says around a fifth of people don’t believe money muling is illegal.

Eloise: And do you think that’s because of how it’s presented on social media and like the um you know how how open it is out there to locate is hiding in plain sight i think for a lot?

Harriet: Of people they they wouldn’t think of it as money laundering I don’t think they would necessarily appreciate where that money was derived from I don’t think they would automatically maybe naively probably think that it’s drug money or money that the criminal gang have made illegally i don’t know where they think it comes from and maybe it’s just that they would rather not ask or they they don’t question because it’s presented in a different way so often the things we see on social media are presented as like job opportunities like job scams um where it’s like you can make money fast like work i think you’re like work from home make 500 pounds a day kind of idea we’ve we’ve all seen those flying around.

I’m sure um and another one that i saw recently was this idea of overpayment scams where the money mules will engage you they’ll buy something from you on a marketplace for example and again they’re very prevalent now aren’t they with like all the different ones like Facebook marketplace for example but they’ll send you more money than what you listed it for and they’ll be like oh I’ve made an error so you don’t even think about it in the scheme of the this is too good to be true like that was a saying my dad always taught me if it seems too good to be true it probably is um nobody gives you anything in life for free or for doing nothing um those kind of life lessons that um parents instilling us um and actually when you think about money mule and I think people just don’t want to think about that part of it like actually if somebody’s willing to give you £500 pounds to do nothing but let them use your bank there’s always a catch is what I would say in those things but people choose not to but yeah the overpayment one’s interesting because actually that’s even less direct it’s like oh send you more money by accident could you send it me back now we talk about that don’t we when we’re training and we talk about refunds even even when we’re talking about like the unregulated sector and we’re talking about accounts teams and why they have processes in place when people want refunds and all of that great stuff but in your individual life would you think about it the same would you think oh well maybe that person’s just really busy they’ve just made a genuine mistake before you sent them the money back because then inadvertently you’ve potentially just become part of something much bigger I thought that was really interesting because that’s in more indirect money mule isn’t it it’s not quite as direct as the job scam one where you yeah probably.

Eloise: I think we do sometimes have a tendency to jump to the obvious or the elaborate examples which feeds this narrative that money laundering is suitcases or gym bags full of cash being held by a particular client that fits a particular stereotype.

Therefore if you don’t fit that bill then you know you might not be squeaky clean but you’re not a money launderer and and i think that slight tunnel vision is what causes you know potential issues and bringing it back to these wider way more relatable examples is what can really bring it home for four teams because i think you know if we’ve established anything today and I’m conscious we’re you know we’re sort of closing out the last 10 minutes or so, the stark reality is that money laundering doesn’t happen in the abstract and the role of law firms is not um you know an island or any regulator professional you’re not an island in this process we’re all part of the the bigger picture and you know these transactions occur and and someone’s involved in them and someone’s implicated in them and that money might be laundered through your community or or your high street and it’s the credibility that the profession provide which is what the criminals need us for like that that’s it it’s not that they think we’re you know great it’s that veil of legitimacy that our involvement provides where did that money come from I came through so and so solicitor’s client account you know is that going to cause someone to just stop asking any further questions because because they’ll assume that that’s okay and and I think really thinking about what sits behind um you know the the generation of this um criminal property we’ve touched on it we’ve touched on drug trafficking fraud modern slavery cybercrime corruption you know vat frauds all sorts all sorts that we say see that’s what is putting the cash in the suitcase um and and that’s the bit of the story that there is is really hard hitting and i think you know my takeaway would really be this micro action point.

Really understanding why the strength of the controls that you have in place in your firm are so important and and we talk about protecting firms and we talk about protecting the earners but how often do we actually say and your community and our you know economy and the you know the credibility of the profession as a whole that’s probably a topic for a whole other podcast but um you know we sometimes stop at we’re just trying to protect you in the firm.

Harriet: I think for me I’d even go further than that like for me it’s about protecting my family it’s about protecting my friends it’s about making it a safe place for them to all live and thrive and obviously our community is a big part of that because we all live within it, and and if one of those got caught up in something I’d be mortified like do you know what I mean.

Like when your grandma gets the texts that are trying to solicit you to share information no matter how many times I tell her I constantly repeat the message like ignore it if somebody rings you and they’re asking you just hang up like we we all well I do that continuously because I have to reiterate the message to her but again it’s quite easy to get caught out as well isn’t it because there is that gap where it it looks so legitimate people are like well actually well no no it’s it’s got to be real like kind of idea and that that for me is quite scary and so i think for me it’s it is about the real people in my life um beyond just my community like they mean them more to me than any anyone and so actually anything that we can do that makes them safer.

I can make sure that I don’t have to worry about um what text message my grandma’s going to click on tomorrow kind of idea makes me sleep a little bit easier beyond just um the firm just going back to your point on suitcases and money and thinking about resources where we can go and get great information and conversation there is um a podcast called and there’s an episode called sunshine on lollipops i don’t know whether you’ve listened to it but it’s an national crime agency podcast and the sunshine on lollipops actually follows money mewling um and it was a big case that went on around money muling and Dubai and money in suitcases and lots of individuals um and something we haven’t touched on today but I think is really apparent in in that podcast is stereotypes often we have real clear stereotypes of money launderers and what they look what bodies look like obviously driven by films um and fictional characters but the reality is often that they look like me and you like there is no stereotype look again.

When I think about my bank of examples that I’d use when I was training they are your grandma who used to have a great full-time job um in a professional environment who happens to fall on hard times because she had an injury um and then ended up calling herself a gangster granny because she was involved in drugs it is there’s another one with an old man in his 70s who had a friend who operated a brothel um again these are based in Manchester because I often talk to the team about Manchester um he his friend operated a brothel she was away she asked him to do some banking for her let’s call it banking um and inadvertently got involved in money laundering the money from the brothel he was something like 72 and he looked just like my granddad would have like looked you know i mean very unassuming if he’d have walked in my door would i have thought anything of it probably not because they look like me you your next door neighbour like there is no look to a money laundering i think again that’s again we’ve not really touched on it in here but a lot of these cases a lot of these examples although we’re talking about brazen and we’re talking about how dangerous actually don’t get me wrong some will have a look but others will be very unassuming and so you can’t take anything on on that face value on that appearance either because actually they’re pretty clever do you know what i mean like yeah they know how to present themselves as well um so i thought it’s worth shouting out that podcast it’s a very it’s a very interesting episode um as well.

Eloise: And do you have any sort of like top tips or takeaways from today that people can leave um the live session today or for anyone listening online on the podcast version like where you know what’s a good next step to taking relation to this?

Harriet: I do, would you believe it um I do have a top tip I think it would be to create a weekly habit a really good one um if you can’t achieve it weekly bi-weekly or even monthly whatever seems achievable to you right now but create that good habit listen to one podcast watch one program or read something like the national crime agencies car sorry case studies they’re booklets write down make some notes or have a conversation put some structured time in everybody in the team read the same one maybe even and come together as a group or watch the same episode think about what was the crime how did the money move what looked suspicious what could you have maybe detected if it had come across your desk.

Just create great conversations on the back of the material and Ii think the more that we can make that a good habit the more that we can make that regular and continuous the more powerful the conversation around the why becomes I think that’d be my biggest kind of takeaway

Eloise: Yeah, I think that’s great it just brings everything that people are already doing to life um and and if you’re already doing the the work in terms of the policies and the controls and the procedures you you want to complete that by making sure that everything you’re doing and delivering is as effective as possible and i think not underestimating the significance of this part of the conversation in that effectiveness conversation it’s not something that’s going to be measured by a metric um but it is something that’s going to really instil confidence across the firm at all levels and and definitely your MLRO will sleep a bit better at night if they’re satisfied that their teams are confident and um and really you know well informed as to what they’re looking out for and feel empowered to do something about it as you’ve touched on

Harriet:I think as well like often we find fear and are struggling to explain to a client why well why are you asking me these questions like are you accusing me like those kind of conversations I’m sure for anybody who’s involved in doing due diligence you’ve answered that a fair few times but by doing more of this work by looking at more of this stuff by building that confidence actually that conversation becomes really easy I’ve had lots of fear and is in my time telling me how hard that is but actually when you say to to clients will be doing this because actually in in the communities that we all live this is on like happening and you can start to share that story actually clients get really behind it because none of us want it on our doorsteps.

Eloise: Yeah absolutely and I think that like the big takeaway from both of us and and I’ve really enjoyed this session Harriet thank you for joining me um is every transaction is essentially a choice it’s a choice to challenge ignore or facilitate and you know if you are curious and you ask the questions then we can make sure that collectively we are choosing to challenge and and the compounding effect of that is not is not going to be a micro action that’s that’s that’s going to have real impact so thank you very much for everyone joining us today.

We are back in two weeks time with our next episode talking about when um financial well-being and regulation and ethics collide so do join us for that session the recording will be circulated to delegates the podcast will be live tomorrow so do keep an eye out for those so you can share with your colleagues because I think there’s a lot of takeaways today that are going to be beneficial not just to those which we um have joining us from a compliance background but you know lawyers and management alike.

Thanks very much thank you take care.

Kate: Thank you for listening to HiveRisk What’s the Buzz? If you have found this session valuable please do join us on our future live webinars where you can interact with us and have that interactive experience you’ll find all the details in the show notes.

If you do want to continue the compliance conversation about your own firm then the high risk team would love to get to know you and also do remember that you can’t solve compliance all at once so keep informed stay structured and stay connected