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' 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 The money can then be withdrawn before the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
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.