Joint Money Laundering Steering Group - JMLSG

Question 1

What is the guidance under the FCA and the JMLSG?

Answer 1

1. FCA follows the guidance issued by the JMLSG (Joint Money Laundering Steering Group).
2. JMLSG Guidance is approved by HM Treasury.
3. JMLSG provides practical assistance on interpreting UK money laundering regulations.
4. FCA’s Role: When investigating a potential breach of anti-money laundering (AML) rules, the FCA will consider if firms have followed relevant JMLSG provisions for the UK financial sector.

Question 2

Give me a brief overview of the JMLSG

Answer 2

The JMLSG is made up of leading UK trade associations in the financial services industry.

Aim: Promote good practices to counter money laundering and help firms interpret money laundering regulations.

Question 3

As per the JMLSG - what are the key requirements for firms?

Answer 3

1. Internal Controls, Policies, and Procedures
   A. Firms must implement controls and policies to deter criminals from using their services for money laundering.
   B. Firms must designate a central contact with law enforcement agencies (usually the MLRO/Nominated Officer).
2. Identification Procedures
   A Firms must obtain satisfactory evidence of the identity of those they do business with in a timely manner
3. Record-Keeping
   A. Firms must retain records for at least 5 years after completion of the business.
   B. Key records to keep include:
   I. Customer identification details.
   II. Transaction records.
   III. Suspicion reports.
   IV. Training & competence monitoring records.
   C. These records provide a clear audit trail for the firm.
4. Recognition and Reporting of Suspicious Transactions
   A. Suspicious transactions are those that don’t match a customer’s known business or personal activities.
   B. First step: Firms must have enough knowledge of the customer’s business to recognize unusual transactions.
   C. Obligation to report: All staff must report suspicious transactions to the MLRO/Nominated Officer.
   D. MLRO’s Duty: They must report to the National Crime Agency (NCA) if they suspect money laundering based on an internal report.
5. Staff Training
   A. Training is crucial to ensure staff are aware of their obligations under the law.
   B. Proper training helps staff identify suspicious activities and promptly report them.

Question 4

What are the offences under the money laundering law?

Answer 4

1. Assistance in Money Laundering
   A. Offence: Assisting someone in money laundering.
   B. Punishment: Maximum 14 years’ imprisonment, or a fine, or both.
2. Tipping-off
   A. Offence: Informing someone that a money laundering investigation is ongoing.
   B. Punishment: If committed by someone in the regulated sector (e.g., financial services):
   I. Maximum: 2 years’ imprisonment, or a fine, or both.
3. Failure to Disclose
   A. Offence: Failing to disclose knowledge or suspicion of money laundering.
   B. Punishment: Maximum: 5 years’ imprisonment, or a fine, or both.
   C. Note: The Serious Crime Act 2015 offers protection from civil liability to those making reports in good faith.
4. Failure to Comply with Regulations
   A. Offence: Failing to comply with money laundering regulations (e.g., not implementing adequate identification procedures).
   B. Punishment: Maximum: 2 years’ imprisonment, or a fine, or both.
5. False or Misleading Statements
   A. Offence: Recklessly making a false or misleading statement regarding money laundering.
   B. Punishment: Maximum: 2 years’ imprisonment, or a fine, or both.

Question 5

What are consequences of not obliging with money laundering laws and regulations?

(Summary of previous flashcard)

Answer 5

1. Assisting money laundering: Maximum 14 years imprisonment.
2. Tipping-off: Maximum 2 years imprisonment if in regulated sector.
3. Failure to disclose: Maximum 5 years imprisonment.
4. Failure to comply with regulations: Maximum 2 years imprisonment.
5. False or misleading statements: Maximum 2 years imprisonment.