Money Laundering Flashcards
Define money laundering
To move illegally acquired cash through financial systems so that it appears to be legally acquired
Define criminal property
Property obtained which was knowingly obtained as a result of criminal conduct
Should the value that is being laundered bare any weight as to whether an accountant should report the money laundering?
No there is no lower limit on the value that counts as money laundering
What is the POCA?
Proceeds Of Crime Act 2002
What does the POCA set out?
The principal money laundering offence and the requirements to report suspicious transaction
What is TA?
Terrorism Act
What does TA set out?
Principle terrorist financing offences and reporting obligations in similar term to POCA
What does the Money Laundering Regulations 2007 (the regulations) require?
Sole traders and firms to establish procedures intended to detect and prevent activities relating to money laundering and terrorist financing
What does the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 set out?
Further more detailed rules regarding the risk based approach the accountants must take to customer due diligence
What does the NCA stand for?
National Crime Agency
What is the NCA
Crime fighting law enforcement agency responsible for proactive operations against serious and organised crime. These crimes include class A drugs, people smuggling, human trafficking and money laundering.
What are the penalties for money laundering?
Unlimited fine and/or a prison sentence of up to fourteen years
Do accountants have a duty to report?
Yes POCA and TA require accountants to disclose suspicion of criminal property to the NCA through a suspicious activity report (SAR).
If the organisation is big enough who could you also report to?
The Money Laundering Reporting Officer (MLRO) through an internal report.
If the MLRO suspects money laundering how do they report it?
To the NCA through a SAR.
What is terrorist financing?
The provision or collection of funds from legitimate or illegitimate sources with the intention or in the knowledge that they should be used in order to carry out any act of terrorism
What is the maximum penalty for terrorist financing?
An unlimited fine and/or up to 14 years in prison
What are the two circumstances where a required disclosure must be made?
When an accountant wishes to provide services to a client in relation to property which is known or suspected to relate to money laundering or terrorist financing. They must state they are asking for consent to provide these services and cannot provide them until they have received consent.
When an accountant knows, suspects or has reasonable grounds to suspect that another person is engaged in money laundering or terrorist financing, regardless of whether they act for them. This could therefore be a client, colleague or third party
What must the standard reporting or SAR contain?
The indentity or suspected person
The information on which the suspicion of money laundering is based
The whereabouts of the laundered property if it is known
Details of the person making the report which will normally be the MLRO or sole practitioner
Should an accountant report a mistake on tax affairs to HMRC?
No they should report this to the MLRO or the NCA if this is not possible
Where should fraud also be reported?
To the police
Are required discloses protected?
Yes
What does a protected disclosure mean?
Protected against allegations of breach of confidentiality
Anyone who believes they may have engaged or are about to engage in money laundering should make a what to the appropriate authority?
Authorised disclosure
When should an authorised disclosure be carried out?
Before the act is carried out
There are three exceptions to the duty to report. What are they?
1) When the information was gained in a situation other than in the course of an accountant’s business e.g. a social occasion
2) When the information came about in privileged circumstances that resulted from an accountant being asked to provide legal advice
3) Where there is a reasonable excuse for not reporting straightaway. The report must be made as soon as possible. A ‘reasonable excuse’ must be something extreme such as duress or threats to safety.
What is the maximum penalty for failure to disclose?
5 years imprisonment and/or a fine
What are the two situations where a further money laundering offence could be made?
When there is going to a money laundering investigation and you either:
make a disclosure that is likely to prejudice an investigation
falsify, conceal or destroy documents relating to the investigation
Define prejudicing an investigation?
Making a disclosure that is likely to adversely affect an investigation into suspected money laundering
Define tipping off?
The criminal offence o warning an individual that they are suspected of money laundering
Is it only tipping off when you intend to prejudice the investigation?
No you can still be prosecuted even if you don’t mean to prejudice the investigation
Can you still advise your client generally about money laundering?
Yes you can advise any client about money laundering and the fines related to it. But you must never disclose that an SAR has been filed or an MLRO has been informed
Define customer due diligence
Evaluating prospective business decisions by investigating relevant financial, legal and other important information about the other party
What does CDD stand for?
Customer Due Diligence
What should CDD include?
Verifying the client’s identity by looking at documents, data or information obtained from a reliable source
Where a person owns the business is not the person who runs it, the accountant should also ensure they understand who the beneficial owners are (25% ownership)
Should find out what the client wants from the relationship
How long should CDD records be kept for after the relationship has ended?
5 years
What should a CDD record include?
Reference to or copies of CDD evidence to verify identity eg passports
Copies or documents that have been subject to CDD or to ongoing monitoring e.g an invoice supporting a large payment to a supplier
What are the situations where CDD should be carried out?
1) When a relationship with a client begins
2) When an accountant carries out an occasional transaction in excess of 1000 euros where there is not an ongoing business relationship
3) When an accountant suspect money laundering and/or terrorist financing
4) When there is doubt about a clients ID
5) When the circumstances of an existing client change
6) When the regulations require an accountant to apply enhanced CDD
- provided false ID
- transactions with high risk countries
- where a client or potential client is politically exposed person
- where a transaction is unusually large or complex
