Money laundering Flashcards
What is money laundering?
Involves financial transactions where proceeds from serious crime are cleaned so that its source is harder if not impossible to trace
When would you need a money laundering risk assessment?
- A client depositing cash in the firm’s client account solely for onward transmission to a third party. * A client acquiring property, investing in a business or buying an asset using cash which is the proceeds of crime. * Setting up legal or transaction structures which are intended to be used for money laundering, and hide the source of the funds. Sometimes complex trust structures are set up to acquire assets for this purpose. * A client using a firm’s client account to mix clean and dirty cash to disguise the audit trail
What are warning signs for money laundering?
Warning signs
- Instructions outside your firm’s area of expertise
- Unusual retainers
- Use of client accounts
- Setti g up a trust
- Property purchase
What are the high risk jurisdictions?
- Democratic republic of kora
- Iran
- Myanmar
Afghanistan - Barbados
- Cambodia
- Cayman Islands
- Haiti
- Syria
- Uganda
- Vanuatu
- Yemen
- Democratic Republic of the Congo
- South Sudan
- Trinidad and Tobago
- Tanzania
- Philippines
What are the offences under the Proceeds of crime act 2002?
- S327 – concealing, disguising, converting criminal report or removing criminal property from UK
- S 328 – entering into to becoming concerned in an arrangement which you know or suspect facilitates the acquisition or retention or use of criminal property
- S 329 – acquiring, using or possessing criminal property
What are the defences to s327,328,329?
Section 338(2) requires the disclosure to be before the alleged offender does the prohibited act
Section 338(2A) requires the disclosure to be made during the prohibited act AND he began to do
the act at a time when, because he did not then know or suspect that the property constituted or
represented a person’s benefit from criminal conduct, the act was not a prohibited act, AND the
disclosure is made on his own initiative and as soon as it is practicable for him to make it
Section 338(3) requires the disclosure to be made after the prohibited act AND there is a good
reason for the solicitor’s failure to make the disclosure before he did the act AND the disclosure is
made on his own initiative and as soon as it is practicable to make it.
Other defences for proceeds of crime act?
Section 338(5) says a ‘disclosure to a nominated officer’ is a disclosure which:
(a) is made to a person nominated by the alleged offender’s employer to receive authorised
disclosures, and
(b) is made in the course of the alleged offender’s employment.
What is the golden rule when it comes to money laundering?
Disclose
If you suspect that a person you are dealing with is planning to transfer criminal property to your
firm or employer’s bank account, the golden rule is:
Report your concern to your MLRO or other nominated official
THE NOMINATED OFFICER IS UNDER S LEGAL DUTY TO REPORT IT TO NCA
What is the regulated sector?
Regulated sector’ is defined in Schedule 9 of PoCA. It contains a list of
different businesses and activities, including insurance companies, investment services,
accountancy services, insolvency practitioners and providing tax advice. The regulated sector
also includes ‘participating in financial and real property transactions’. - a lot of lawyer work is in that field
But also
Client money
Opening of banks
Management of companies
Non-direct involvement offences - failure to disclose?
It is an offence to fail to make a disclosure.
- If you know or suspect that someone is laundering money
- you receive info in course of business in regulated sector
- you can identify the person who is laundering the proceeds of criminal conduct
Once you have made a disclosure to MLRO or NCA how long must you wait before you take further action?
SHOULD NOT UNLESS
- authorised to do so by NCA; or
* seven working days (notice period) has passed from the disclosure to NCA during which time
NCA has not refused authority to proceed; or
* The NCA refused consent during the notice period, and the moratorium period (31 days
starting with the day the firm received notice that consent was refused) has expired
Tipping off?
It is an offence to tip off
What if you are not working in the regulated sector?
Like litigation then non-direct involvement offences ONLY apply to the regulated sector.
The penalties for offences under the proceeds of crime act?
A person guilty of an offence under ss 327, 328 or 329 is liable:
(a) on summary conviction to imprisonment for a term not exceeding six months or to a fine not
exceeding the statutory maximum or both, or
(b) on conviction on indictment, to imprisonment for a term not exceeding 14 years or to a fine or
to both.
FOR NON-DIRECT
- IMPRISONMENT UP TO 5 YEARS.
What is the Money laundering Regulations 2017 and who do they apply to?
- Credit institutions
- Financial institutions
- Auditors, insolvency practitioners, external accountants and tax advisors
- Independent legal professionals
- Trust or company service providers
- Estate agents
- High value dealers
- Casinos
SO APPLY TO LAWYERS AND COMPANY SERVICE PROVIDERS
