Money Laundering

Question 1

Define money laundering

Answer 1

To move illegally acquired cash through financial systems so that it appears to be legally acquired

Question 2

Define criminal property

Answer 2

Property obtained which was knowingly obtained as a result of criminal conduct

Question 3

Should the value that is being laundered bare any weight as to whether an accountant should report the money laundering?

Answer 3

No there is no lower limit on the value that counts as money laundering

Question 4

What is the POCA?

Answer 4

Proceeds Of Crime Act 2002

Question 5

What does the POCA set out?

Answer 5

The principal money laundering offence and the requirements to report suspicious transaction

Question 6

What is TA?

Answer 6

Terrorism Act

Question 7

What does TA set out?

Answer 7

Principle terrorist financing offences and reporting obligations in similar term to POCA

Question 8

What does the Money Laundering Regulations 2007 (the regulations) require?

Answer 8

Sole traders and firms to establish procedures intended to detect and prevent activities relating to money laundering and terrorist financing

Question 9

What does the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 set out?

Answer 9

Further more detailed rules regarding the risk based approach the accountants must take to customer due diligence

Question 10

What does the NCA stand for?

Answer 10

National Crime Agency

Question 11

What is the NCA

Answer 11

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.

Question 12

What are the penalties for money laundering?

Answer 12

Unlimited fine and/or a prison sentence of up to fourteen years

Question 13

Do accountants have a duty to report?

Answer 13

Yes POCA and TA require accountants to disclose suspicion of criminal property to the NCA through a suspicious activity report (SAR).

Question 14

If the organisation is big enough who could you also report to?

Answer 14

The Money Laundering Reporting Officer (MLRO) through an internal report.

Question 15

If the MLRO suspects money laundering how do they report it?

Answer 15

To the NCA through a SAR.

Question 16

What is terrorist financing?

Answer 16

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

Question 17

What is the maximum penalty for terrorist financing?

Answer 17

An unlimited fine and/or up to 14 years in prison

Question 18

What are the two circumstances where a required disclosure must be made?

Answer 18

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

Question 19

What must the standard reporting or SAR contain?

Answer 19

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

Question 20

Should an accountant report a mistake on tax affairs to HMRC?

Answer 20

No they should report this to the MLRO or the NCA if this is not possible

Question 21

Where should fraud also be reported?

Answer 21

To the police

Question 22

Are required discloses protected?

Answer 22

Yes

Question 23

What does a protected disclosure mean?

Answer 23

Protected against allegations of breach of confidentiality

Question 24

Anyone who believes they may have engaged or are about to engage in money laundering should make a what to the appropriate authority?

Answer 24

Authorised disclosure

Question 25

When should an authorised disclosure be carried out?

Answer 25

Before the act is carried out

Question 26

There are three exceptions to the duty to report. What are they?

Answer 26

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.

Question 27

What is the maximum penalty for failure to disclose?

Answer 27

5 years imprisonment and/or a fine

Question 28

What are the two situations where a further money laundering offence could be made?

Answer 28

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

Question 29

Define prejudicing an investigation?

Answer 29

Making a disclosure that is likely to adversely affect an investigation into suspected money laundering

Question 30

Define tipping off?

Answer 30

The criminal offence o warning an individual that they are suspected of money laundering

Question 31

Is it only tipping off when you intend to prejudice the investigation?

Answer 31

No you can still be prosecuted even if you don’t mean to prejudice the investigation

Question 32

Can you still advise your client generally about money laundering?

Answer 32

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

Question 33

Define customer due diligence

Answer 33

Evaluating prospective business decisions by investigating relevant financial, legal and other important information about the other party

Question 34

What does CDD stand for?

Answer 34

Customer Due Diligence

Question 35

What should CDD include?

Answer 35

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

Question 36

How long should CDD records be kept for after the relationship has ended?

Answer 36

5 years

Question 37

What should a CDD record include?

Answer 37

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

Question 38

What are the situations where CDD should be carried out?

Answer 38

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