10.3: Money Laundering

Question 1

What legislation regulates money laundering?

Answer 1

• Proceeds of Crime Act 2002 (POCA), which applies to proceeds of crime processed
  (money laundered) after 24 February 2003
• Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer)
  Regulations 2017 (MLR), which came into force on 26 June 2017, as amended by Money
  Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force
  on 10 January 2020, and
• Terrorism Act 2000 (Terrorism Act).

Question 2

What does offences under the Proceeds of Crime Act 2002 relate to?

Answer 2

Found in Pt 7. Offences include those related directly to
money-laundering activity and those related to a failure to report money-laundering activity.

Question 3

What is the ‘arranging offence’ under s328 of the Proceeds of Crime Act 2002?

Answer 3

Facilitate / concerned in an arrangement
which the person knows or suspects facilitates (by whatever means) the
acquisition, retention, use or control of criminal property by or on behalf
of another person.

Question 4

It is a criminal offence to not (under s330 of the POCA)

Answer 4

report money laundering and the reporting officer to not report

Question 5

What is the significance of 7 days

Answer 5

7 day waiting period after reporting an offence / suspicion to receive permission to act / authorisation

Question 6

Proceeds of Crime Act 2002

Answer 6

POCA

Question 7

Following a disclosure to the MLRO - what are the steps

Answer 7

MRLO reports to the National Crime Agency, no further action can be taken by the solicitor, in the meantime care must be taken not to tip off the client.

Question 8

S333 A of the POCA

Answer 8

Tipping off

Question 9

What are the offences under the Terrorism Act 2000?

Answer 9

specific offences related to the funding of terrorism
such as fundraising, use and possession, funding arrangements, money laundering, duty to disclose

Question 10

Tell me about: Money Laundering, Terrorist Financing and Transfer of Funds (Information
on the Payer) Regulations 2017, as amended by the Money Laundering and
Terrorist Financing (Amendment) Regulations 2019

Answer 10

Applies to regulated law firms and relevant persons
uses a risk based approach

Question 11

What does the MLR require law firms to have?

Answer 11

Money Laundering Compliance Officers
policies and procedures in place to ensure vigilance against money laundering and terrorist activities
Risk assessments
Training

Question 12

Who do the regulations of the MLR apply to?

Answer 12

The regulations apply to ‘relevant persons’ which includes independent legal professionals who carry out legal activities such as selling property, managing money, creating and managing trusts etc

Question 13

MLRO reports to the

Answer 13

National Crime Agency

Question 14

Due diligence encompasses?

Answer 14

Identifying and carrying out verification of the identity of clients
Systems in place to safeguard against the potential for the firm to be used for money laundering

Question 15

Enhanced
customer
due
diligence

Answer 15

MLR reg 33 sets out a requirement
to carry out a higher standard of due
diligence, known as enhanced due
diligence, where required.

Question 16

Why would a firm carry out Enhanced Customer Due Diligence? Provide examples

Answer 16

• large or unusual transactions or
  those where the client is not
  physically present
• an unusual pattern of
  transactions
• person who is politically exposed person under reg 36

Question 17

What does a Politically Exposed Person mean?

Answer 17

Under reg 35 of the MLR:

means politicians or other
similar high-profile persons who
might be more susceptible to
involvement in bribery or
corruption) or a family member of
a politically exposed person

Question 18

Look out for the

Answer 18

high risk countries e.g South Africa or South Sudan
in such a case where a person is a national of a high risk country, a firm would be expected to carry out an Enhanced Customer Due Diligence

Question 19

Potential defence to Proceeds of Crime Act direct offences ie. arranging or money laundering

Answer 19

where an individual has
made a prior “authorised disclosure”, under s 338, in relation to the potential money-laundering
offence (or had an intention to do so, with reasonable excuse for not doing so)

Question 20

Potential defence to a ‘failure to disclose’ under s330 of the POCA

Answer 20

1. “reasonable
   excuse” under s 330(6)(a). Reasonable excuse is not defined.
2. Under s 330(6)(b) a defence of professional legal privilege may
   also be available but advice may be needed from the MLRO.
3. It may also be a defence under s 330(7) that insufficient training has
   been given on money laundering for the person to have become
   suspicious.