Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Associate legislation and regulation > Section 2 > Flashcards

Section 2 Flashcards

1
Q

• Proceeds of Crime Act 2002

A
  • Amended by Serious Organised Crime and Police Act 2005

- Criminalises money laundering and set out the offences and penalties

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

• The Money Laundering Regulations 2017

A
  • Detailed regulation setting out administrative provisions for companies at risk of handling funds for money laundering
  • Complies with the Fourth Money Laundering Directive
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

• Senior management arrangements, systems and controls (SYSC)

A
  • High-level rules and guidance for authorised firms

- Makes reference to JMLSG guidance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

• Joint Money Laundering Steering Group guidance

A
  • Guidance on how to implement anti-money laundering provisions
  • Not binding
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

The Criminal Finances Act 2017

A

The Criminal Finances Act 2017 amends the Proceeds of Crime Act 2002, making provisions in connection with terrorist property and criminalising the failure to prevent tax evasion both in the UK and outside the UK

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

MLR 2017

A

The full title for the Money Laundering Regulations is:
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).
MLR 2017 is UK law, which originally brought the EU Fourth Money Laundering Directive (4MLD) into UK legislation. MLR 2017 has since been amended so as to incorporate the Fifth and Sixth Money Laundering Directives into UK law.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Money laundering: three stages

A
  1. Placement:
    Proceeds of any crime are placed into a bank or building society
  2. Layering:
    Payments are taken from the bank and used to buy different investments to cover the audit trail
  3. Integration
    The money appears as a legitimate source of income
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

The Money Laundering Regulations 2017 (MLR 2017)

Risk Assessments

A
  • Assessing ML and FT risk for the firm
    • Proportionate to the size and nature of firm
    • Appoint a director as responsible for compliance with these regulations
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

The Money Laundering Regulations 2017 (MLR 2017)

• Customer due diligence

A 
- Identification procedures
• Obtain satisfactory evidence regarding identity as soon as reasonably practicable
- Enhanced CDD
• PEPs
- Simplified CDD
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

The Money Laundering Regulations 2017 (MLR 2017)

• Reliance

A
  • Cannot rely upon CDD by firms in high-risk jurisdictions

- Must supply identity information on any ‘relied-upon’ party at start of business arrangement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Customer Due Diligence

Enhanced

A
  • Any case identified by the firm under its risk assessment (or information provided by supervisory authorities) where there is a high-risk of ML/TF
  • Any transaction where a person is established (or in a transaction with a person established) in a high risk third country
  • Where the client has not been physically present for identification purposes
  • In respect of a relation to correspondent banking relationships
  • In respect of a business relationship or occasional transaction with a PEP, or a family member or known close associate of a PEP
  • In any case where a customer has provided false or stolen identification
  • In any case where a transaction is complex and unusually large or there is an unusual pattern of transactions.
  • Transactions relating to oil, arms, precious metals, tobacco products, cultural artefacts, ivory or other items related to protected species,
  • Transactions relating to archaeological, historical, cultural and religious significance, or of rare scientific value.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Politically Exposed Persons

A

‘an individual who is or has, at any time in the preceding year, been entrusted with a prominent public function, other than as a middle-ranking or more junior official. Under the definition of a PEP, firms obligation to apply EDD measures to an individual ceases after they have left office for one year, or a longer period if the firm considers that it might be appropriate
– in order to address risks of ML/TF in relation to that person’

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

The Money Laundering Regulations 2017 (MLR 2017)

Education and training for employees along with recordkeeping

A 
The law and regulations relating to AML
- Recognising suspicious transactions
- Proper ways to report
• Employees report to MLRO, who reports to NCA
5 years
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

The Money Laundering Regulations 2017 (MLR 2017)

Criminal offences for directors/senior managers

A
  • Failure to comply with the Money Laundering Regulations (two years and/or unlimited
    fine)
  • Recklessly making a statement in context of ML which is false or misleading (two years and/or unlimited fine)
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Suitable evidence

A

Individuals
• Examples of proof of identity include a passport or driving license.
• Evidence of address is also required: e.g. a utility bill or entry on the electoral roll. A passport is not evidence of address.

Companies
• It may be necessary to carry out checks on the company and individuals representing the company – People with Significant Control
• Evidence should be obtained from independent sources: e.g. Companies House, company accountants and lawyers.
• These records should be kept up to date and any discrepancies notified to Companies House

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Record Keeping

A

All records should be kept for 5 years after:
• The business relationship has ended or
• An occasional transaction
The requirements state that there is no need to keep records of occasional transactions beyond ten years

17
Q

The Proceeds of Crime Act 2002

General offences

A

Concealing, arrangements (assisting), acquiring and/or possessing -> 14 years and/or unlimited fine. Knowingly prejudicing an investigation -> 5 years and/or unlimited fine.

18
Q

The Proceeds of Crime Act 2002

Regulated sector offences

A
  • Failure to report (five years and/or unlimited fine)

* Tipping off (two years and/or unlimited fine)

19
Q

Examples when a firm may be suspicious of the motives of a new/existing client include:

A
  • A reluctance of a new client to provide identification documents
  • An unnecessary use of a third party to act as an intermediary
  • Continual patterns of unusual trading
  • A request for non-market price transactions
  • The constant use and transfer of bearer securities
  • An introduction from a suspicious party or jurisdiction
20
Q

National Crime Agency (NCA)

A

The law enforcement agency to which suspicions of money laundering must be reported by a firm’s money laundering reporting officer (MLRO).

21
Q

Failure to disclose: other details

A

Defence
It is a defence to the accusation of failure to disclose if the employee can prove they had had inadequate or no training on recognising suspicious transactions.
Reasonable suspicion
An employee can be found guilty of failing to report a suspicion they did not have, if they ought reasonably to have had a suspicion.
The test as to whether there are reasonable grounds to know or suspect money laundering is called the ‘objective test’.

22
Q

The joint money laundering steering group (JMLSG)

A

• The JMLSG is a combination of UK trade associations including the BBA.
• Guidance notes on how to implement the Money Laundering Regulations.
• Risk-based approach
• Guiding principles
- Customers’ identities verified before acceptance
- Knowing the customer on an ongoing basis
- Adequate training of staff
- Recognition of the importance of prompt reporting
• Risk mitigation approach
- Summary assessment of money laundering and terrorist financing risk
- Allocation of responsibilities to specific persons
- Summary of firm’s procedures
- Summary of firm’s monitoring

23
Q

JMLSG Guidance

A

Senior management roles should include a MLRO and a senior manager responsible for the direction and oversight of anti-money laundering and combating the financing of terrorism (AML/CFT).
Adequate documentation should be produced, including the policy and procedures of the firm to implement AML/CFT. This documentation must include a named employee responsible for its implementation and an assessment of the firm’s risks. These documents must be specific to the firm’s business and customer risks – a generic document is not adequate.
As part of the risk-based approach, the JMLSG identifies high-risk and low-risk clients.

24
Q

The money laundering reporting officer and the nominated officer

A

• A responsible person
- POCA, The Terrorism Act and MLR require a nominated officer
- FCA requires a MLRO
- Generally both roles performed by the same person and called MLRO
• MLRO will report to the National Crime Agency (NCA)

25
Q

National Crime Agency

A
  • Objective is to tackle organised crime, defend the UK’s borders, fight fraud and cyber-crime, and protect children and young people
  • Led by a senior chief constable
  • Accountable to the Home Secretary
26
Q

Financial Action Task Force

A
  • A global inter-governmental money laundering and terrorist financing watchdog.
  • Sets and monitors recommendations/standards.
  • Holds countries to account that do not comply
27
Q

Terrorism Act 2000 and Anti-Terrorism Crime Security Act 2001

A
  • Obligation to report suspicions of:
    • Provision of funds for terrorism
    • Use and possession of terrorist funds
    • Laundering money which is terrorist property
  • Failure to report (five years and/or unlimited fine)
28
Q

• Counter Terrorism Act 2008

A
  • Gives extra powers to Her Majesty’s Treasury (HMT) to impose directions on firms suspected of
    handling funds to be used for terrorist activities
  • Powers include:
    • Customer due diligence and monitoring
  • Increasing the identification requirements
    • Systematic reporting
  • HMT can require information without application to the courts
    • Limiting or ceasing business
  • Where the Financial Action Task Force (FATF) requires
  • Where HMT believes there is a significant threat to national interests

Associate legislation and regulation (5 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions