Money Laundering and POCA Flashcards
When is standard due diligence conducted and what are the requirements? (Individuals)
When: This applies to most clients, it is the standard procedure.
Requirements: Verify the client’s identity based on reliable government documents
What are the requirements of standard due diligence for a company?
Necessary to verify:
(a) company name;
(b) company number or other registration; and
(c) the registered office address and principal place of business.
Also, need to verify the beneficial owners if they own over 25% of the company or if they exercise ultimate control over the company (this doesn’t apply if the company is listed on a regulated market).
When is simplified due diligence conducted and what are the requirements?
When: A firm determines that the transaction presents a low risk of money laundering. E.g. if a company is listed on a regulated market and is based in the UK.
Requirements: Solicitor must obtain evidence to show that it presents a low risk of money laundering, e.g. confirmation of a company’s listing on the stock exchange.
When is enhanced due diligence conducted and what are the requirements?
When: politically exposed person; in a high-risk third country; the case is unusually complex or large; or has been identified as a high risk of money laundering.
Requirements: All previous steps as well as examining the background and purpose of the transaction and possibly obtaining independent verification of the client’s or beneficial owner’s identity. Enhanced monitoring of the business relationship, too.
What is the offence of ‘Arranging’ under s328? What is the mental requirement?
‘enter into or become concerned with an arrangement they know or suspect involved criminal activity’
E.g. transferring property, participating in a sham litigation etc.
Must actually know or suspect it is criminal property.
What are the defences to s327, s328 and s329?
Making an authorised disclosure:
I.e. making a disclosure to the MLRO at the firm who may then report it to the NCA. Can only proceed after: 7 working days, if no response; 31 days, if they said to wait in the first 7 working days.
Overseas defence:
If the property isn’t criminal in the country the owning party operates from, then no offence is committed.
What is the offence under s329 ‘Acquisition, use or possession’?
Where criminal property is acquired, used or in a solicitor’s possession, an offence has been committed - e.g. holding money that is from criminal proceeds.
If adequate consideration was given to using the proceeds and the individual didn’t know they would be used to carry out criminal conduct, this is a defence.
What is the offence under s327 ‘concealing etc’?
Offence to conceal, disguise or transfer criminal property.
What is the offence under s330 ‘Failure to disclose’? Is it objective or subjective?
If a person:
- knows/suspects that a person has engaged in money laundering;
- the information came to him in the private sector; and
- the information may be material
it is an offence to not disclose it.
This is an objective test. Thus, even if the person didn’t know or suspect money laundering if it would’ve been reasonable to build that understanding from the information (so in this respect it is subjective, it depends on what the person knew), there is no defence
What is the S333A ‘Tipping off’ offence?
This means alerting someone suspected (or an associate of the suspected) of an investigation into their money laundering or a disclosure of their report to the MLRO or NCA.
