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Read how the UK accountancy establishment reacted to our revelations

Read how we negotiated some of the barriers to this type of research

Read a debate in the UK Parliament
Parliamentary answer on 2 March 1998

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Money laundering, described as the ‘mother of all crimes’, is on the increase. The amounts laundered through Western financial markets are estimated to be anywhere between US$ 750 billion and a trillion dollars: large enough to dwarf the Gross Domestic Product (GDP) of many nations and destroy thriving economies. Such large amounts cannot easily be laundered without the (direct or indirect) involvement of accountants for they, like the lawyers and financial experts, have the technical knowledge of the world's financial systems. It is accountants who create and manipulate the complex transactions that make it difficult to identify and trace the origins and ultimate destiny of the illicit funds. When acting as auditors, the accountants are also incapable or reluctant to reveal and report such activity.

Throughout the world, regulatory agencies are drawing attention to the involvement of accountants in laundering money. The Financial Action Task Force (FATF), an organisation created by the G-7 nations to combat money laundering, has reported that there is “an increase in the number of ........ accountants ..... whose services are deployed to assist in the disposal of criminal profits” and that their “ploys include the establishment of shell corporations, trusts and partnerships ..... Working through these business entities, the professionals spin webs of intricate transactions to mask the origin of criminally derived funds and to conceal the identities of the parties and beneficiaries. In many cases, professionals act as directors, trustees, or partners in these transactions, or they will supply nominal directors, trustees, or partners”. The UK based National Criminal Intelligence Service (NCIS) has reported that “Criminals continue to use ........ professional money launderers (including ..... accountants)”. The statistics published by the NCIS show that UK accountants are least likely to notice instances of money laundering, and are perhaps unwilling to report what they know. The Economic Secretary to the UK Treasury has reported that “There is increasing use of ….. the services of accountants …. to launder money”.

In the 1990 High Court case of AGIP (Africa) Limited v Jackson & Others., Mr. Justice Millett judged that “[Accountants] are professional men. They obviously knew they were laundering money. .... It must have been obvious to them that their clients could not afford their activities to see the light of the day. Secrecy is the badge of fraud. They must have realised at least that their clients might be involved in a fraud on the plaintiffs”. The court also judged that other accountancy firms may be involved.

By using the AGIP affair as a case study, we show that the claims of successive governments to be combating money laundering are not supported by their actions. The strong High Court judgement should have prompted the Department of Trade and Industry (DTI) and other regulators to investigate the matters. They did not. When urged to investigate, various government departments, the Prime Minister, the Serious Fraud Office, the Attorney General, the Police and the Institute of Chartered Accountants in England & Wales (ICAEW), all considered it to be someone else’s responsibility. Despite the court revelations, there has been no investigation and no public report. Some 20,000 pages of evidence is available to shed further light on the matters disclosed during the High Court judgement, but no UK regulator is interested in examining it. There is a wall of silence and buck-passing. In this monograph we show the responses of various regulators to the High Court judgement.

Any effective fight against money laundering requires greater openness and public accountability. But deregulation, increased secrecy and ineffective public surveillance have been the preferred government policies. There is little reflection on the social values which encourage individuals to make quick gains even by anti-social and predatory actions. Professionals, such as accountants, are involved in laundering money, but the government expects these same occupations to somehow help in the fight against money laundering. It relies upon accountancy trade associations to investigate the involvement of accountants in money laundering. In fact, these trade associations have no independence from their members. They have failed to combine their regulatory responsibilities with their primary role of trade associations. They do not owe a ‘duty of care’ to any citizen. So there is no check on the involvement of accountants in money laundering. Unless the government is prepared to act rather than continue to indulge the accountancy trade associations, the involvement of accountants in money laundering will continue unchecked.