The Financial Services Authority outlined to local banks and building societies on Tuesday how money laundering can and has possibly affected their businesses.

FSA managing director Carol Sergeant said it was important to maintain confidence in the UK's financial system.

"That includes protecting customers and reducing financial crime," she said.

"Most businesses are strongly committed to help us combat money laundering and other financial crime.

Allegations of money laundering are on the increase with banks and financial advisers often the target of criminals Paul McKinney PricewaterhouseCoopers

"I want to ensure that regulated businesses in Northern Ireland understand the role and powers of the FSA and how we can work together to combat money laundering."

The FSA has powers to investigate any regulated company or individual in the banking, insurance and financial services sector.

Any businesses found to have broken money laundering rules can face unlimited fines and the FSA can prevent companies and individuals from continuing to trade.

'Terrorist financing'

Paul McKinney, a partner with PricewaterhouseCoopers in Belfast said Northern Ireland companies needed to be vigilant on financial crime in general and money laundering in particular.

"Allegations of money laundering are on the increase with banks and financial advisers often the target of criminals attempting to launder the proceeds of crime," he said.

"The recent enactment of the Proceeds of Crime Act, the establishment of the Assets Recovery Agency and the FSA's new powers are evidence of a new multi-agency approach to tackling the growing challenges from money laundering, financial crime and terrorist financing."

The Assets Recovery Agency started its work just over a month ago.

If it can convince a court that someone is enjoying a lifestyle which they cannot possibly have earned legally, a judge can order their possessions to be confiscated and sold.

The agency will investigate dirty money - from prostitution to protection rackets.

The new agency will be given a target of seizing £60m by 2004/5.

It will work with the Inland Revenue, Customs and Excise and the Serious Fraud Office, hunting down those profiting from organised crime.