8. Money Laundering Flashcards
What is money laundering?
-to move illegally acquired cash through financial systems so that it appears to be legally acquired
What are the 3 stages of money laundering?
- placement
- layering
- integration
What is placement?
-moving the money into a system
-paying it into a bank account or into an offshore account
What is layering?
-creating a web of transactions to move the money around the financial system
-obscures the audit trail
What is integration?
-integrating the illegal funds back into the legitimate financial system
-investing in property or assets
What are some money laundering activities?
-acquiring criminal property
-theft, fraud and tax evasion
-transferring criminal property
-investing proceeds of crime into other financial products
-entering arrangements to facilitate laundering or terrorist property
What are the 3 main laundering legislations in the UK?
- Proceeds of Crime Act 2002
- The terrorism act 2000
- The money laundering and terrorist financing regulations 2020
What is the proceeds of crime act?
-sets out the principal money laundering offence and the requirements to report suspicious transactions
What is the terrorism act?
-sets out principal terrorist financing offences and reporting obligations in similar terms to POCA
What is the money laundering and terrorist financing regulations?
-more detailed rules including the risk based approach you must take to customer due diligence
-seek to prevent new means of terrorist financing
What is the national crime agency?
-law enforcement agency
-tackles organised crime
-eg. human trafficking, fraud and computer crime
What are the money laundering penalties?
-an unlimited fine or up to 14 yrs prison sentence
What is terrorist financing?
-provision or collection of funds from legitimate or illegitimate sources with the intention that they should be used in order to carry out any act of terrorism
When must a required disclosure in an internal report or SAR be made?
-when you wish to provide services to a client in relation to property which is known to money laundering - cannot provide the services until consent is received
-suspecting that another person is engaged in money laundering
What must the report or SAR contain?
-identity of suspect
-info on which the suspicion of money laundering is based
-the whereabouts of the laundered property if known
-details of the person making the report
What is a required disclosure?
-disclosure of money laundering must be made when an accountant knows or suspects money laundering on the part of the client
What is a protected disclosure?
-disclosure of a suspicion of money laundering is protected against allegations of breach of confidentiality
What are the exceptions to the duty to report?
-when the info that forms the basis of knowledge was obtained in other courses of business eg. socials
-when info came about in privileged circumstances that resulted from you giving legal advice
-reasonable excuse for not reporting straight away
What are 3 money laundering offences?
- concealing
- arrangement
- acquisition
What is concealing?
-disguising criminal property
-it’s nature, source, location and ownership
What is arrangement?
-entering into, or become concerned with an arrangement that facilitates the use of criminal property
What is acquisition?
-acquiring or using criminal property
What is the penalty of failure to disclose?
-maximum penalty of 5 years imprisonment or a fine
What is prejudicing an investigation?
-making a disclosure that is likely to adversely affect an investigation into suspected money laundering
What is the penalty for prejudicing?
-5 years imprisonment or a fine
What is tipping off?
-the criminal offence of warning an individual that they are suspected of money laundering
What is customer due deligence?
-evaluating prospective business decisions by investigating relevant financial, legal and other important information about the other party
Where should you carry out CDD?
-establishing a business relationship with client
-carrying out occasional transaction between a client
-suspects money laundering
-doubt about a client’s identification
What does CDD include?
-verifying client identity from reliable source
-understand the beneficial owners
-the purpose and nature of the relationship with the client
