8. Money Laundering

Question 1

What is money laundering?

Answer 1

-to move illegally acquired cash through financial systems so that it appears to be legally acquired

Question 2

What are the 3 stages of money laundering?

Answer 2

1. placement
2. layering
3. integration

Question 3

What is placement?

Answer 3

-moving the money into a system
-paying it into a bank account or into an offshore account

Question 4

What is layering?

Answer 4

-creating a web of transactions to move the money around the financial system
-obscures the audit trail

Question 5

What is integration?

Answer 5

-integrating the illegal funds back into the legitimate financial system
-investing in property or assets

Question 6

What are some money laundering activities?

Answer 6

-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

Question 7

What are the 3 main laundering legislations in the UK?

Answer 7

1. Proceeds of Crime Act 2002
2. The terrorism act 2000
3. The money laundering and terrorist financing regulations 2020

Question 8

What is the proceeds of crime act?

Answer 8

-sets out the principal money laundering offence and the requirements to report suspicious transactions

Question 9

What is the terrorism act?

Answer 9

-sets out principal terrorist financing offences and reporting obligations in similar terms to POCA

Question 10

What is the money laundering and terrorist financing regulations?

Answer 10

-more detailed rules including the risk based approach you must take to customer due diligence
-seek to prevent new means of terrorist financing

Question 11

What is the national crime agency?

Answer 11

-law enforcement agency
-tackles organised crime
-eg. human trafficking, fraud and computer crime

Question 12

What are the money laundering penalties?

Answer 12

-an unlimited fine or up to 14 yrs prison sentence

Question 13

What is terrorist financing?

Answer 13

-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

Question 14

When must a required disclosure in an internal report or SAR be made?

Answer 14

-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

Question 15

What must the report or SAR contain?

Answer 15

-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

Question 16

What is a required disclosure?

Answer 16

-disclosure of money laundering must be made when an accountant knows or suspects money laundering on the part of the client

Question 17

What is a protected disclosure?

Answer 17

-disclosure of a suspicion of money laundering is protected against allegations of breach of confidentiality

Question 18

What are the exceptions to the duty to report?

Answer 18

-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

Question 19

What are 3 money laundering offences?

Answer 19

1. concealing
2. arrangement
3. acquisition

Question 20

What is concealing?

Answer 20

-disguising criminal property
-it’s nature, source, location and ownership

Question 21

What is arrangement?

Answer 21

-entering into, or become concerned with an arrangement that facilitates the use of criminal property

Question 22

What is acquisition?

Answer 22

-acquiring or using criminal property

Question 23

What is the penalty of failure to disclose?

Answer 23

-maximum penalty of 5 years imprisonment or a fine

Question 24

What is prejudicing an investigation?

Answer 24

-making a disclosure that is likely to adversely affect an investigation into suspected money laundering

Question 25

What is the penalty for prejudicing?

Answer 25

-5 years imprisonment or a fine

Question 26

What is tipping off?

Answer 26

-the criminal offence of warning an individual that they are suspected of money laundering

Question 27

What is customer due deligence?

Answer 27

-evaluating prospective business decisions by investigating relevant financial, legal and other important information about the other party

Question 28

Where should you carry out CDD?

Answer 28

-establishing a business relationship with client
-carrying out occasional transaction between a client
-suspects money laundering
-doubt about a client’s identification

Question 29

What does CDD include?

Answer 29

-verifying client identity from reliable source
-understand the beneficial owners
-the purpose and nature of the relationship with the client