Money Laundering Flashcards
Regulatory Framework for ML
Laws
Process of crime act 2002
ML Regulations 2017
Industry best practice
Joint Money Laundering Steering Group
FCA Handbook - SYC
EU Vs UK law
EU LAW - MLD
UK Law- MLR
UK still amend on 5 + 6 MLD even though not in EU
Secondary legislation- law but is not created in full parliament
Money Laundering process
Separating assets from original origin
Placement - money into bank
Layering - from bank to fund manager (covers audit trail)
Integration - returned to criminal in legitimate means
POCA 2002 offences relating to money laundering
1) Concealment (max 14 years/unlimited fine)
2) Arrangements (max 14 years/unlimited fine)
3) Acquisition use and possession ( max 14 years/unlimited fine)
4) Prejudice an investigation (max 5 years/unlimited fine)
5) Failure to disclose (max 5 years/ unlimited fine )
6) Tipping off (max 2 years/unlimited fine)
Fourth Money Laundering Directive (4MLD)
- Requires risk based approach
- extends definition of PEPs to include domestic politicians
- Requires firms to record beneficial owners
- Includes tax crimes as predicate offences
Fifth Money Laundering Directive (5MLD)
January 2020
- Adds legal definitions of virtual currencies
- limits prepayment card usage to 150 without ID, 50 for online transactions
- High value goods (jewelers) traders require adequate KYC for transactions above 10,000
- Public lists of beneficial ownership and politically exposed public functions
Sixth Money Laundering Directive (6MLD)
UK did not adopt into UK law
- Predicate offences harmonised, cybercrime & environmental crime added to list
- Adds offence of aiding and abetting money laundering
- extends criminal liability to legal persons
- Increases minimum penalties for those found guilty of ML offences
Main MLR 2017 requirements
1) Internal controls, policies and procedures
2) Identification procedures
3) Record Keeping
4) Recognition and reporting suspicious transactions
5) Education & training
1) Internal controls, policies and procedures
Main MLR 2017 requirements
Establishment procedures for identify + reporting
Appointment of MLRO
Co-operate FCA
2) Identification procedures
Main MLR 2017 requirements
Required;
- ML known/suspected
- new business relationship
- transaction/series > 15,000
Not required;
- Deal with UK/EU credit financial institution
- Intro from FATF, J , G, IOM (one-off)
- Bank transfer/ cheque from personal accounting
2) Identification procedures - Individuals UK+Non UK
Individuals
UK Resident -
Face to Face = Personal documents
Not Face to Face = Personal docs + public docs (Credit agency reference search)
NOT UK Resident -
Face to face = Personal documents
Not Face to Face = Local Reference (local bank, lawyer, solicitor)
2) Identification procedures - Businesses UK+Non UK
UK Quoted + Known Directors = No special procedures
UK Quoted + Unknown Directors = Audited accounts/ cert incorporation
Check on directors/partners
OverSeas
As above but special care (Russia,Nigeria, Colombia)
3) Record Keeping
Retention of relevant records (identity checks) five years
Full details transactions and counterparties
Special care with bearer securities
4) Reporting of suspicious transactions
Individual employee - MLRO - NCA
5) Education & Training
- Training appropriate to experience/ responsibility
- aware personal liability