Chapter 3 - Money Laudering

Question 1

Explain the Money Laundering Regulatory framework?

Answer 1

Money Laundering - Regulatory framework

PROCEEDS OF CRIME ACT 2002 (POCA 2002)

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ML REGULATIONS 2007 (MLR 2007)

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JOINT MONEY LAUNDERING STEERING GROUP (JMLSG): GUIDANCE NOTES
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FCA HANDBOOK:
SYSC

Question 2

What is money laundering?

2 points?

Answer 2

1. Money laundering means exchanging money or assets that were obtained criminally for money or other assets that are ‘clean’. (‘Clean’ money or assets are money or assets that do not have an obvious link with any criminal activity.)
2. Money laundering also includes money that is used to fund terrorism, however it is obtained.

Question 3

Who do the Money Laundering Regulations (MLR) apply to?

Answer 3

• In addition to banks, deposit-takers and other financial services businesses, the MLR apply to credit businesses, high value dealers, accountants, lawyers and estate agents.

Question 4

Explain the STAGES OF MONEY LAUNDERING

Answer 4

STAGES OF MONEY LAUNDERING

“PLACEMENT”

Λ

“LAYERING”

V

“INTEGRATION”

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OFFENCES AND PENALTIES

Assistance 14 years/fine
Failure to report suspicions 5 years/fine

Tipping off: regulated sector 2 years/fine

Failure to comply with ML Regs 2 years/fine

Also:

Prejudicing a ML investigation 5 years/fine

Question 5

Money Laundering

Explain the Main MLR 2007 requirements:

5 points

Answer 5

1. Internal controls, policies and procedures
2. Identification procedures
3. Record keeping
4. Recognition and reporting of suspicious transactions
5. Education and training

Question 6

Money Laundering

1. Internal controls, policies and procedures

3 points

Answer 6

1. Establishment of procedures for identification and reporting
2. Appointment of MLRO (also known as the Nominated Officer)
3. Liaison and cooperation with NCA

Question 7

2. (A) Identification procedures – when?

Answer 7

Required

*ML known/suspected
*New business relationship *Transaction/series ≥€15,000

Not required

*Deal with UK/EU credit/fin’l inst’n

*Intro from FATF, J, G, IOM (one-off) *Bank tfr/cheque from personal a/c

Question 8

Money Laundering

Identification procedures – how?

Answer 8

2. (B)INDIVIDUALS

*UK-RESIDENT

Face-to-face *Personal documents

Not face-to-face *Public documents

*NOT UK-RESIDENT

Face-to-face *Personal documents

Not face-to-face *Local reference

BUSINESSES​

*UK QUOTED or

UK U/Q + KNOWN DIRECTORS/PTNRS

*No special procedures

*UK U/Q + UNKNOWN DIRECTORS/PTNRS

*Audited accounts/cert of incorp; checks on

directors/ptnrs

*OVERSEAS

*As above, but special

care (e.g. Russia, Nigeria, Colombia)

Question 9

Money Laundering

3. Record keeping

Answer 9

1. Retention of relevant records (identity checks, etc.): five years •
2. Full details of transactions and counterparties
3. Special care with bearer securities