Food firms at risk from money laundering

Global food traders must safeguard themselves against the risk of exposure to money laundering, urged International law firm Eversheds following the publication of a new study.

The study, conducted by the Financial Action Task Force, found that schemes linked to international trading are a growing area of criminal activity.

It warned that the rise in global trading, combined with growth in money laundering as a means of funding terrorist activity, has made international trading systems particularly vulnerable to exploitation.

Peter Kiernan, partner and financial crime specialist at Eversheds, said: “Money laundering is moving beyond traditional boundaries and now poses a real threat to UK food businesses, many of which have export trading agreements and rely on supplies of imported food ingredients.

“Any food business trading globally could be running the risk of getting caught up in such criminal schemes, exposing their business to significant financial risk as a result.”

To minimise risk, companies should get closer to their customers and suppliers, suggested Kiernan. They should also look out for discrepancies in the supply chain that could indicate criminal activity. “For example, while food produce is typically subject to some fluctuation in costs, businesses should look out for goods entering the supply chain that appear to be significantly over or under valued,” he warned.

The penalties for a food company involved in money laundering range from heavy fines to 14 years imprisonment. However, the most likely offence would be failing to report suspected money laundering, which carries a five-year jail term.