Financial Crime Flashcards
What is money laundering?
Process where money illegally obtained is made to appear legally obtained
By various methods, the nature source and ownership of these criminal proceeds are concealed
What is criminal conduct?
is a crime that constitutes an offence in the UK or an act abroad which is deemed ilegal in the UK
When is property, criminal property?
If it constitutes a persons benefit from criminal conduct and the alleged offender knows or suspects it constitutes that benefit
What are the phases of money laundering and how many are there?
3 phases
- placement - when the launderer is able to place illegal funds in an institution with little or no disclosure concerning ownership. This makes it hard, if not impossible to trace its criminal source
- layering - when deposits are passed through a series of complicated transactions involving legitimate and illegitimate enterprises it is again hard to detect origin
- integration - if ownership or origin can’t be established it is virtually impossible to establish they are from criminal activity. this means the funds can be used legally
What are the main changes brought about by the Money Laundering Regulations 2007 (MLR 07)
-term ‘occasional transaction’ (defined as less than 15,000 Euros)
is used instead of ‘one-off’
-risk based approach is mandatory for risk management generally and in applying customer due diligence
-detailed coverage of customer due diligence in 07 regulations with guidance on how to meet obligation of identifying customers and mandatory monitoring of customer relationships
-enhanced due diligence on risk-sensitive basis, including politically exposed persons outside the UK
-additional scope for relying on other appropriately qualified regulated firms, although the’relying firm’ retains ultimate responsibility for meeting the obligations under the Regulations
To what do MLR 07 relate?
Institutional liability generally. They require internal systems and procedures to be implemented to deter criminals from using certain institutions to launder money. They also aim to enable money laundering to be more easily detected and prosecuted by law enforcement agencies
Under MRL 07 what ‘risk-sensitive’ policies and procedures must be established?
- customer due diligence measures and ongoing monitoring
- internal reporting
- record keeping procedures (5-year period)
- internal control
- risk assessment and management
- compliance monitoring, management and comms of policies and procedures
- recognition of suspicious transactions
- reporting procedures, including appoint MLRO
- staff training programmes
What happens with regards to failure to implement ‘risk-sensitive policies and procedures’?
- This constitutes a criminal offence
- FCA may institute proceddings for money laundering regulation breaches regardless of whether or not the FCA authorises the party, however it can’t investigate in Scotland
How is it determined is a breach of the Money laundering regulations has taken place
It is not dependent on whether actual money laundering has taken place, firms may be sanctioned for not having AML and CTF systems
What is the penalty for failing to comply with requirements of the ML Regulations?
maximum of two years in prison and an unlimited fine
What are the four main offences?
Assistance
Failure to report
Tipping off
Failure to comply
With regards to POCA, what is assistance?
Knowingly helping someone to launder money. This covers -obtaining -concealing -disguising -transferring -acquiring -possessing -investing -using the proceeds of crime Before POCA legislation covered proceeds of serious crime, not covers all crimes such as tax evasion
What is the penalty for assisting in money laundering?
14 years in prison and/or unlimited fine
With regards to POCA, what is failure to report?
any believe or suspicion of money laundering should be reported to the police of the MLRO asap. failure to do this is a criminal offence
For those in a regulated sector (for an authorised firm) this offence concerns a person having actual suspicions (subjective suspicions) as well when any hypothetical reasonable person would have reasonable grounds for being suspicious. (objective suspicions
What is the penalty for failure to report?
up to 5 years in prison and/or an unlimited fine