Money Laundering Flashcards
Money laundering is
any activity in relation to the proceeds of crime, even passive activity such as mere possession.
Terrorist financing is
the raising, moving, storing and using of financial resources for the purposes of terrorism.
It is the duty of
every barrister to understand the principles of money laundering and terrorist financing and how to recognise them.
Every barrister owes an obligation
not to become involved in conduct that involves money laundering or terrorist financing.
is “ordinary conduct of litigation” count?
“ordinary conduct of litigation” does not count, which will mean that most of the things that you do as a barrister will not trigger anti-money laundering or counter-terrorist financing obligations. However, you should be alert to circumstances that may take litigation out of the “ordinary” and note that the “ordinary conduct of litigation” exception does not apply to activities performed outside a litigation or arbitration context.
Who has additional obligations?
Barristers who advise on financial or real property transactions or who provide tax advice have additional obligations under the Regulation
Barristers who advise on financial or real property transactions or who provide
tax advice have additional obligations under the Regulations
what are they?
- undertake Customer Due Diligence before acting, to keep a record of their compliance with the Regulations
- make disclosure of suspicious activity to the authorities.
- You will need to be able to determine whether the service that you are providing to your client is subject to the Regulations.
You must act :
in compliance with the anti-money laundering and counterterrorist financing requirements of the Bar Standards Board (the BSB) and the BSB Handbook.
The law is in many respects broadly drafted and the consequences of failing to
comply with these obligations are
potentially severe, including criminal penalties of
up to 14 years’ imprisonment.
The money laundering offences are:
- Concealing, disguising, converting or transferring the proceeds of crime or removing the proceeds of crime from the jurisdiction (s.327);
- 10.2. Entering into or becoming concerned in an arrangement that facilitates the acquisition, retention, use or control of criminal property (s.328);
- 10.3. The acquisition, use and possession of criminal property (s.329); and
- 10.4. Making an unauthorised disclosure or taking an action or causing an action to be taken that that is likely to prejudice an investigation (s.342).
Terrorism Act 11. The terrorist financing offences are:
- Fund-raising for terrorism (s.15);
- Use or possession of property for terrorism (s.16);
- Entering into or becoming concerned in an arrangement that makes property available for the purposes of terrorism (s.17);
- Entering into or becoming concerned in an arrangement that facilitates the retention or control of terrorist property (s.18); and
- Failing to disclose a suspicion obtained in the course of a trade, profession or business of the commission of a terrorist financing offence (s.19).
What happens with LPP and the provisions?
do not override a client’s Legal Professional
Privilege. You must not make any form of disclosure to the authorities of information
protected by Legal Professional Privilege.
When does LPP not apply?
Legal Professional Privilege does not protect communications made in
furtherance of a crime.
When are you within the scope of the Regulations?
- As an independent legal professional when participating in financial or real property transactions, and
- The “financial or real property transactions” concern:
- the buying and selling of real property or business entities;
- the managing of client money, securities or other assets;
- the opening or management of bank, savings or securities accounts;
- the organisation of contributions necessary for the creation operation or management of companies; or
- the creation, operation or management of trusts, companies,foundations or similar structures, and
- You are participating in the transaction by
- a. assisting in the planning or execution of the transaction or
- b. otherwise acting for or on behalf of a client in the transaction
You are within the scope of the Regulations.
What is the second reasons you are within scope of regulation?
acting as a tax advisor in relation to the provision of tax advice, then
you are within the scope of the Regulations.
- If the work that you are undertaking is not transactional and not providing tax
advice then you are not subject to the Regulations.
What are your obligations if yu fall under the Regulations?
- You must have in place policies, controls and procedures that address the risk of money laundering or terrorist financing in your practice.
- You must carry out a risk assessment in relation to work within the scope of the Regulations.
- You must undertake Customer Due Diligence.
- You must keep a record of the Customer Due Diligence that you carry out.
- You must monitor your relationship with your customer.
How to Address those Obligations
You must take a risk-based approach to the above obligations: the measures
that you take must be sufficient to meet the perceived level of risk.
Therefore, you need to know how to assess and determine the existence and
level of the risk of money laundering or terrorist financing.
Potential indicators of money laundering or terrorist financing activity will
come in a variety of forms but may include:
- the lay client being based in a high-risk country or region,
- the nature of the business operated by the lay client,
- the source of funds involved in the transaction or
- the personal circumstances of the lay client or someone involved in your instructions.
You need to be able to consider the different
risk factors, assess any indicators
of suspected criminal activity and decide what steps you need to take to mitigate those
risks.
Enhanced Due Diligence
- There may be circumstances where the risk of money laundering or terrorist
financing is such that you may need or will be obliged to apply an enhanced level of
Customer Due Diligence, for example
- where the lay client is based in or operating from a country that is known to present such a risk or
- is a Politically Exposed Person. In those circumstances you will need to apply greater due diligence to mitigate the increased level of risk.
Reliance
- Where you act upon the instructions of a professional client such as a solicitor
you may be able to rely on their Customer Due Diligence. However
if you do, you
remain legally responsible for those checks and thus for any failings in them.
Other Obligations Under the Regulations
Where you are undertaking work that falls within the scope of the Regulations
you may commit a criminal offence if:
- you suspect that money laundering is taking place and you fail to make the required disclose to the authorities (s.330), or
- you make an unauthorised disclosure of your suspicion of money laundering or of your knowledge of a money laundering investigation to another person (aka “tipping-off”) (s.333A).
How to make disclosure/ where to
Where you are required to make a disclosure of suspected money laundering
or money laundering this must be done by way of making a Suspicious Activity Report
to the NCA. Such reports should be made electronically via the NCA’s website.
Public and Licensed Access
- Where you undertake public access work the requirements of the Regulations
fall upon you directly, e.g. the Customer Due Diligence obligations. If you are
instructed on a licensed access basis by a suitable professional on behalf of a lay client,
you may
be able to rely on due diligence checks carried out by that professional, but
will otherwise be in a similar position to those acting on a public access basis.
