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Firms urged to tighten security to halt Tessa money laundering

The maturing Tessa market could open the door for millions of pounds-worth

of money laundering, according to the UK fraud advisory service Cifas.

In an article for the Pep and Isa Managers&#39 Association this month, Cifas

executive director Peter Hurst warns that the lack of anti-fraud

precautions on maturing Tessa certificates has made them easy to

counterfeit. Current regulations stipulate that individuals can reinvest

Tessas up to six months after maturity. But Hurst says this gives

fraudsters the chance to launder money into Tessa rollover accounts with

fake maturity certificates. The money can then be withdrawn before the

Inland Revenue catches up with them.

Although providers are unlikely to lose any money in these instances,

Hurst warns that reputations could be sullied if firms are embroiled in

money-laundering scams and he has called on the industry to raise security

standards.

He says there are several types of commonplace financial services fraud.

In many inst-ances, he says, Isa accounts have been opened and closed

within a few days, with providers returning funds before the initial cheque

has been cashed.

Hurst says Pep and Isa managers have not yet become mainstream victims of

fraud but this may make them more likely targets in the future.

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