Money Laundering Flashcards
What are the three stages of money laundering ? P165
- Placement
- Layering
- Intergration
What is the placement stage of money laundering ? P165
- Moving - legitimate financial system
- paying into bank account , offshore account
- most likely caught
What is the layering stage of money laundering ? p165
- Complex web transactions creation
- move around financial systems - layering transactions
- obscure audit trail - conceal original source
What is intergration ? p165
- Intergrate- back into legitimate financial system
- property invesment/ other asset
- carefully actioned - plausible explanation
What are the main activities related to money laundering ? P165
- acquire , use , possess - criminal property
- handling crime proceeds
- knowingly involved - criminal/ terrorist property
- arrangement - allow - laundering property
- investing proceeds - financial products
- investing proceeds - acquisition of property/ asset
- transferring property
What is criminal property ? P165
- property obtained knowingly - criminal conduct
- e.g. - money , security, tangible/ intangible property
What is terrorist property ? p166
- Property use- terrorist purposes
- use - process commissioning/ carrying out act
What if an accountant provides service whilst turning ‘a blind eye’ to the client’s suspected dealings ? P166
- you - guilty money laundering
- facilitating illegal activity
What impact does the value of criminal property have on whether an accountant should report money laundering or not ? P166
- No bearing
- No de minimus exception/ lower limits - laundering/ terrorist fnance offences
What are the three main anti-money laundering legislations in the UK ? P166
- The proceeds of crime act 2002 (POCA)
- The Terrorism Act 2000 (TA)
- The Money Laundering and Terrorist Financing Regulations 2020 (MLR)
What does POCA do ? P166
The proceeds of crime act 2002
set out:
* principal money laundering offence
* requirement to report - transctions (suspicious)
What does TA do ? P166
The terrorism act 2000
Sets out:
* principal terrorists financing offences
* reporting obligations
What does the MLR do ? P166
The Money Landering and Terrorist Financing Regulations 2020
- Sets out:
- detailed reules
- risk based approach - customer due diligence
- new terrorists funding prevention - emoney, prepaid cards
What is the national crime agency ? P167
- Law enforcement agency
- operations against - organised crime
- e.g. Class A drugs , Money laundering
What are the potential penalties for money laundering ? P167
- Unlimited fine
- 14 year prison sentence
What does POCA and TA require accountants to do ? P167
- Report suspicion - client, empoyer, colleague - criminal property involvement
- To NCA - suspicious activity report (SAR)
- Large organisation - Money Laundering Reporting Officer (MLRO)
- MLRO to NCA
When must MLRO report money laundering to NCA ? P167
- Earliest opportunity
- MLRO consent from NCA - complete transaction
- delay not possible - MLRO inc in report - NCA
What is terrorism financing ? P167
- Provision/ collection of funds - legitimate/ illegitimate source
- intention / knowledge
- should carry terrorism
- used or not
What is the maximum penalty for terrorism financing ? p167
- Unlimited fine
- and/or
- 14 years imprisonment
What is the first circumstance in which an accountant is required to dislclose money laundering/ terrorist financing in SAR/ internal report ? P168
relating to consent
- Wants to provide service
- known/suspected property - money laundering/ terrorism
- person making - in report - indicate consent request
- no consent = no service
What is the second circumstance where the required disclosure in an internal report or SAR must be made ? P168
- Actually knows / suspects / reasonable objective grounds
- wish to act = irrelevant
What must the suspicious activity report contain ? P168
- Suspected person identity
- information forming suspiciojn
- laundered property whereabouts
- report maker details = MLRO / sole practitioner
What should an accountant also report to the MLRO and NCA (sole practitioner) , other than money laundering and terrorist financing ? P168
- Failure to disclose omission - tax
- failure to disclose an error - tax
- fraud report - police
What should be in place to ensure accountants comply with the reporting requirements for reports and SARs , and what will happen if its not? P169
- Training and internal procedures
- liable- fine/ imprisonment or both
What is protected disclosure ? P169
- Report submission - required disclosurre - suspicion of monet laundering
- against breach of confidentiality allegations
What should any person, not just an accountant, do if they have or will engage in money laundering ? P169
- Authorised disclosure - appropraite authority
- before act - consent 4 act from NCA
- OR
- soon after - good reason for delay - defence from charges
When is the accountant not obliged to report knowledge / suspicion of money laundering ? P169
Info attained:
* not business - e.g. social
* priveleged circumstances - advice/ opinion / service - legal proceedings
* not reported promptly - reasonable excuse - rare
When would finding information regarding money laundering through privelged circumstances not protect the accountant ? P169
- Advice - enables criminal offence / to avoid detection
What are three money laundering offences committed by individuals or businesses P170
- concealing
- arrangement
- acquisition
How is ‘concealing’ a money laundering offence ? P170
- Hiding / disguising
- nature, source, location , movement, ownership
- e.g. - convert/ transfer criminal property
- e.g. remove from uk
How is ‘arrangement’ a money laundering offence ? P170
- Enter into / concered - arrangement
- know/suspect - facilitates acquisition/ rentention / use of control - criminal property
How is ‘acquisition’ a money laundering offence? 170
- acquire/use/ have possession - criminal property
When will a person not committ the money laundering offence ? P170
Authorised disclosure
What happens if an accountant fails to disclose money laundering ? P170
- Maximum penalty - 5 years imprisonment and/or fine
- professional accountign body - disciplinary action
What is prejudicing a money laundering investigation ? P170
- Person/ accountant - knows/ suspects investigation conduction:
- disclosure - prejudice investigation
- falsifies, conceals, destorys documents - causes
Does the person making the disclosure have to intend to prejudice an investigation, and is there a defence for unintentional disclosure ? P171
- unintential = still offence
- defence available:
- disclosure making - didn’t know:
- prejudical
- documents relevant
- no intention - conceal facts
What is the maximum penalty for prejudicing a money laundering investgiation ? P171
- 5 years prison and/or fine
What is tipping off ? P171
- Knows/ thinks:
- report - MLRO, NCA, & HMRC
- legal liability
- no intention required
How could an accountant unintentionally tip off a client ? P171
- reporting client - MLRO / NCA - made client aware
Is an accountant allowed to advise a client in general terms about money laundering, without tipping them off ? P171
Yes- no offence
What is the maximum penalty for tipping off ? P171
- 5 years imprisonment and/or fine
What must happen to businesses subject to money laundering regulations ? P172
- Supervisory authority
- different businesses:
- accountants
- financial services
- estate agents
- solicitors
Who will accountants subject to money laundering regulations be supervised by ? P172
- Professional accounting body
- if not - register HMRC
- Failure = criminal offence
What is customer due diligence (CDD) ? P172
- evaluating prospective business decisions
- investigating relevant :
- financial
- legal
- other important info - other parties
What approach do money laundering regulations require an accountant firm to take to CDD? P172
- Risk based approach
- analyse client’s potential exposure - money laundering/ terrorist
- document proces followed - assess risk
- document CDD carried out
What are the situations outlined by the money laundering regulation that require the accountant to carry out CDD ? P172
- Business relationship - client
- doing occasional transaction - not business relationship w client
- suspects laundering / terrorism finance
- client identification info doubt
- circumstances of existing client/ client change - previous knowledge inconsistence
- regulation required enhance CDD - circumstances - higher risks laundering / terrorism
What must the accountant do to carry out sufficient CDD ? P173
- Detailed look at client- way it operates
- decision - professional relationship
- confidence needed - no ethical issues/ risks of money laundering
What should CDD include ? p173
- verification - documents , data, other info
- understanding - beneficial owners indentity 25% - verification checks
What must the accountant do if they are unable to carry out adequate CDD checks ? P173
- Decline assignment
What should the accountant do if they’ve carried out CDD and have found the client may be involved in money laundering/ terrorism funding ? P173
- Report to money laundering officer
- Suspicious activity report - national crime agency
What do money laundering regulations require in relation to records of CDD? p173
- maintained - assist future law enforcement investigations
- demonstration - statutory obligation compilance
What should the records of CDD include ? P173
- Copies/reference CDD evidence - client identity verification - e.g. passport
- copies/ original documents - transactions subject to CDD - invoices
How long should copies of CDD client identity evidence be kept ? P173
- 5 years - start date = client and accountant relationship end
How long should documents relating to transactions subject to CDD be kept for ? P173
- 5 years - start date = accountant completed client’s instructions
