Topic 23: Anti-money-laundering

Question 1

What is Financial Exclusion?

Answer 1

The term used when someone is in danger of being excluded from basic financial services such as bank and savings accounts because they cannot provide the usual identification documents for anti-money-laundering purposes. To make access possible, a firm can accept a letter or statement from a person in a position of responsibility – solicitor, doctor, etc. – who knows the customer.

Question 2

What is Money Laundering Reporting Officer? (MLRO)

Answer 2

A senior person in a firm with responsibility for co-ordinating and monitoring the firm’s compliance with money laundering requirements, and for reporting suspicious activity to the National Crime Agency.

Question 3

What is Money Laundering?

Answer 3

Money laundering involves filtering the proceeds of any kind of criminal activity (including terrorism) through a series of accounts or other financial products in order to make such funds appear legitimate or to make their
origins difficult to trace.

Question 4

Under the Proceeds of Crime Act 2002, there are three principal money laundering offences?

Answer 4

1. Concealing criminal property
2. Arranging
3. Acquiring, using or possessing

Question 5

What is Failure to Disclose?

Answer 5

The Proceeds of Crime Act 2002 introduced the requirement for a person to disclose information about money laundering if they have reasonable grounds for knowing or suspecting that someone is engaged in money laundering.

Question 6

What is Tipping off?

Answer 6

It is also an offence to disclose to (ie tip off) a person who is suspected of money laundering that an investigation is being, or may be, carried out.

Question 7

What is the Financial Action Task Force?

Answer 7

The Financial Action Task Force (FATF) is an inter‑governmental
organisation established in 1989 to co‑ordinate the international fight against money laundering. In 2001, the
remit of the FATF was expanded to include terrorist financing.
It is a policy‑making body: it does not become involved in law
enforcement (that is the responsibility of local authorities in individual countries, such as the National Crime Agency in
the UK). In addition to member nation states, the European Commission and the Gulf Co‑operation Council also belong to
the FATF.

Question 8

What is Customer Due Diligence?

Answer 8

One of the most important elements in the financial service industry’s action against money laundering is the process of confirming the identity of customers, referred to as ‘customer due diligence’ or CDD. CDD is required in relation to transactions that are seen as higher risk.

Question 9

Give circumstances requiring identification procedures to be carried out?

Answer 9

1. New business relationships
2. Occasional transactions exceeding £15,000
3. Life assurance policies
4. Suspicion
5. Doubts
6. Change of circumstances

Question 10

Give 5 examples of acceptable forms of ID?

Answer 10

1. Current passport
2. National identity card with photograph
3. driving licence with photograph
4. entry on electoral roll
5. Recent utility bill or council tax bill

Question 11

Explain record keeping requirements?

Answer 11

Institutions must keep appropriate records in respect of
customer due diligence for use as evidence in any investigation
into money laundering. This means that:
- evidence of identification must be retained until at least
five years after the relationship with the customer has
ended;
- supporting evidence of transactions (in the form of originals or copies admissible in court proceedings) must
be retained until at least five years after the transaction
was executed.

Question 12

Explain the role of Credit reference agencies?

Answer 12

Anti‑money‑laundering checks are often carried out by credit reference
agencies on behalf of financial institutions. While the search leaves an anti‑money‑laundering ID footprint, this will not show up in a credit search, nor will it affect an individual’s ability to obtain credit

Question 13

Anyone convicted under the Proceeds of Crime Act 2002 of
concealing, arranging or acquiring (see section 23.2) could be
sentenced to up to?

Answer 13

14 years’ imprisonment or an unlimited
fine, or both.

Question 14

The offence of failing to disclose or of tipping
off carries a prison sentence of up to?

Answer 14

five years or an unlimited
fine, or both.

Question 15

A partner or director who fails to comply with money laundering
regulations can be?

Answer 15

fined, receive up to two years in prison (or
both) or be subject to appropriate civil penalties.

Question 16

Explain Bribery?

Answer 16

The Bribery Act 2010, which came into effect in July 2011, created an offence of offering, promising or giving “financial or other advantage” to another
where the advantage is intended to bring about improper performance by another person of a relevant function or activity, or to reward such improper
performance.

An offence is also deemed to have been committed if the person offering, promising or giving the advantage knows (or simply believes) that acceptance
of the advantage itself constitutes improper performance.

Question 17

What is the penalty for bribery?

Answer 17

The maximum penalty in the UK for an individual convicted of a bribery
offence is an unlimited fine and imprisonment for up to ten years.

Question 18

What is Improper Performance?

Answer 18

Performance that amounts to a breach of
an expectation that a person will act in
good faith, impartially or in accordance with a position of trust.

The test used is what a reasonable person in the UK would expect of a
person performing the relevant function
or activity.