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Legal Services > Money Laundering > Flashcards

Money Laundering Flashcards

1
Q

Who do the money laundering, terrorist financing and transfer of funds (info on payer) regulations 2017 apply to

A

Anyone acting in the course of business in the U.K.

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2
Q

What if you fails to comply with regs

A

That is a criminal offence

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3
Q

How can firms check employees ability to comply with ML regs

A

Firms must screen employees who contribute to detection of ML prior and during employment to check knowledge, skills, conduct and integrity

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4
Q

How to firms avoid ML

A

Must have arrangements to ensure compliance with regs
Must monitor and manage risk to business
Provide and maintain record of training of ML

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5
Q

What roles must a firm create to avoid ML

A

Money laundering compliance officer - senior level to ensure compliance with regs

Nominated officers (ML reporting officer)

Both can be same person

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6
Q

What is required when doing client due diligence

A

Verify ID of clients ASAP after first contact

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7
Q

When must client ID be verified

A

Must be before business relationship or transaction carried out

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8
Q

Can verifying client ID ever be delayed

A

May verify client ID during establishment of business relationship if little risk of ML, necessary not to interrupt normal conduct of business and ID is verified ASAP after contact is first established

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9
Q

What if you cannot verify the clients ID

A

Do not establish business relationship or carry out transaction
Terminate relationship

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10
Q

What to do with due dilligence ID docs

A

Keep copy of ID docs and records of transaction for 5 year after end of relationship

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11
Q

What is standard due diligence

A

Verify ID based on docs or inform from reliable source independent of the client

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12
Q

What information to seek for standard due diligence trusts

A

Trustees, settlor, beneficiafies

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13
Q

Who should you identify for standard due diligence for partnerships

A

Individuals that make it up

If you know we’ll just get name, address and nature of business

Consider beneficial owners- more than 25% of capacity, portfolio, votes

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14
Q

What information should be provided for standard due dilligence on a company

A

Company name, number, address

If not on a regulated market get rules, law , subject to and name of

Beneficiaries - anyone who controls it
Or has more than 25% of the shares or votes

Risk based decision about how much unfit to get from parent company’s

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15
Q

Offence of failure to prevent criminal facilitation of tax evasion

A

Strict liability on part of firm

Firm liable for failing to prevent tax evasion by employees or associated persons

Defence of firm can shape they had reasonable prevention procedures in place or was reasonable not to have such proceedure

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16
Q

When can simplified due diligence be used

A

When a risk assessment shows the business relationship or transaction presents a low risk of ML

Get evidence of eligibility for simplified due diligence

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17
Q

When to use enhanced due dilligence

A

When high risk of ML according to risk assessment
Eg politically exposed person or known close associate or family member, unusually complex transaction or risky third country

18
Q

What to do when using enhanced due diligence

A

Examine background and purpose of transaction
Decide whether to obtain further info
Conduct enhanced ongoing monitoring of business relationship
Establish source of wealth

19
Q

Do you need approval for enhanced due diligence

A

Need senior management approval if they are a PEP

20
Q

Offences under proceeds of crime act 2002

A

Arranging
Acquisition, use or possession of proceeds of crime
Conceal, disguise, concert or transfer the proceeds of crime or to remove the proceeds of crime from the jurisdiction
Failure to disclose information about ML to authorities
Failure to disclose (nominated officer)
Tipping off an individual that an investigation into ML is underway
Prejudicing an investigation in ML

21
Q

Can you breach confidentiality to comply with ML obligations

A

Yes because it is required by law

22
Q

SRA principles that would be breach by a solicitor that does ML

A

Breach honesty, uphold rule of law and administration of justice

23
Q

SRA warning signs of ML

A

Client secretive, evasive, avoids contact, refuses to provide info, unusual funding source, loss making or repetitive transaction, urgency, settles too easily, jurisdiction

24
Q

Prejudicing an investigation into ML - S342

A

Same as tipping off but extends to non-regulated individuals

25
Q

Failure to disclose (nominated officer) - S331

Definition

A

Know or suspect or have reasonable grounds to know or suspect ML due to their role as nominated officer but fail to disclose to NCA ASAP

26
Q

Defence

Failure to disclose (no) s331

A

Reasonable excuse for non disclosure

27
Q

S333A- tipping off an individual that an investigation into ML is underway

Definition

A

2 offences
Disclose a disclosure and likely to prejudice any investigation that follows

Disclose investigation to anyone and likely to prejudice investigation

No need to show intention to prejudice for either
Disclose to anyone - not just client

28
Q

Can tipping off ever be authorised

A

No

29
Q

Defence to s333A tipping off

A

No intention to prejudice is NOT a defence because there is no requirement to show intention to prejudice
just need it to be likely that it will prejudice

Made by adviser to client to persuade them not to ML

30
Q

S330 failure to disclose info about ML to authorities

Definition

A

Knows or suspects or has reasonable grounds to know or suspect that person is engaged in ML (objective test)

Info comes in course of business in regulated sector

Info may assist in identifying ML or location of laundered property and

Does not make disclosure ASAP to NO or NCA

31
Q

S330 failure to disclose info about ML to authorities

Defences

A

Unable to provide info to assist in identifying ML or location or laundered property

Intended to disclose but has reasonable excuse for not doing so

Not received proper training

Overseas defence

32
Q

Overseas defence

A

If solicitor believes ML is taking place outside U.K. where ML is not illegal

33
Q

S327 conceal, disguise, convert or transfer the proceeds of crime or to remove the proceeds of crime from the jurisdiction

Defences

A

Authorised disclosure defence

Overseas defence

34
Q

S329 acquisition, use or possession of proceeds of crime

Example

A

If you think they are paying your fees with proceeds of crime

35
Q

S329 acquisition, use or possession of proceeds of crime

A

Authorised disclosure

Overseas

Adaquate consideration unless knew or suspected goods or services would help carry out criminal conduct. Not if value of work is significantly less than money received

36
Q

S328 arranging

Definition

A

Enter into or become concerned in an arrangement which a person knows or suspects facilitated the acquisition, retention, use or control of proceeds of crime on behalf of another person

No requirement that funds pass through hands of solicitor

Suspicion - subjective. Must know or suspect it is criminal property

37
Q

Would litigation and dividing assesses according to a court judgement fall within s328 arranging

A

No but reinvesting those assets would be an offence under s328

38
Q

Defence to s328 arranging

A

Authorised disclosure

Intended to disclose but has reasonable excuse for failing to do so. Document reasons for non-disclosure

39
Q

Authorised disclosure defence

A

By solicitor to police, HMRC or NO. ASAP prior to transaction taking place and consent of NO or NCA is obtained

Once NO has reported it to NCA cannot give consent until either receive consent of NCA or hear nothing for 7 working days (starting with 1st working day after disclosure made)

When consent refused by NCA nominated officer cannot give consent unless 31 days pass from day of refusal

40
Q

Making an authorised disclosure NOT prior to transaction taking place

A

Can make authorised disclosure while prohibited act on going if they didn’t know or suspect it was criminal property when they began acting and disclosure was made ASAP after they knew or suspected it and made on solicitors own initiative

Can disclose after act completed but must have good reason for failing to disclose sooner. Must be ASAP on own initiative

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