U3 - Overiding Legal Obligations - Anti Money Laundering (Proceeds of Crime Act)

Question 1

What are the 2 overriding obligations?

Answer 1

1. The Equality Act 2010
2. Anti-Money Laundering Legislation (Proceeds of crime act 2002)

Question 2

Who do the overriding obligations apply to?

Answer 2

All legal proffesionals, irrespective of if they are regulated or not.

Question 3

What are the 5 key duties under the Money Laundering, Terroist Financing and Transfer of Funds Regulation 2019?

Answer 3

1. Maintain a written assement identifying and assessing the risk of the firm being used for ML
2. Establish Polices, Controlls and procedures to mitigate and manage the risks identified in the assesment
3. Appoint a Money Laundering Complaince office, and Money Laundering Reporting Officer (SRA must be aware of who this is)
4. Provide staff with apprporiate training on ML and keep records of the training
5. Customer Due Dillegence - Verify clients idenity as soon as possible after the first contact and keep records of the CDD and supporting evidence for 5 years.

Question 4

Regulation 27 and 28 of the Money Laundering, Terroist Financing and Transfer of Funds Regulation prescribes Customer Due Dilligence must be carried out.

When must CDD be carried out?

Answer 4

Solicitors must carry out CDD when:

1. Forming new business relationships
2. Carrying out occasional transactions of £15,000 or above.
3. Suspects Money Laundering
4. The Solicitor doubts the accuracy or adequacy of documents or information previously provided for CDD purposes.

Question 5

What infomation must the solicitor obtain and verify when the client i a corporate body for Customer Due Dilligence?

Answer 5

When the client is a corporate body, the Solicitor must obtain and verify:

1. Its name
2. Its company number (or other registration)
3. The registered office address and principle place of business
4. If the corporate body is not listed on a regulated market, the solicitor should ascertain the law the body is subject to, its constitution (or other governing documents) and the name of the board of directors and the senior persons responsible for its operations.

Question 6

When can solicitors peform Simplified due dillegence and what is simplied due dillegence?

Answer 6

Where the business relationship or transaction is a low risk of money laundering, a solicitor is permitted to adopt a simplified due diligence such as simple obtaining confirmation of the companies listing on the stock exchange.

This could happen when the company is well known financial institution AND its shares are listed on a regulated market.

Question 7

What is enhanced due dilligence?

Answer 7

Where there is high risk of money laundering, enhanced due diligence is required.

Enhanced Due Diligence must include:

1. Examine the background and the purpose of the transaction
2. Increased monitoring of the business relationship

Typically it involves additional steps to verify the clients identify and understand the background, ownership and financial situation of the customer and other parties to the transaction.

Question 8

What are the 2 relevent Regulations for the purposes of anti money laundering?

Answer 8

1. The Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2019
2. Proceeds of Crime Act 2002

Question 9

When is enhanced Due Dillegence required?

Answer 9

EDD Must be carried out where the transaction or business relationship involves:

1. Person from a high risk third country (one that does not have a anti-money laundering regime)
2. A politically exposed Person (Someone appointed to a high profile position within the last 12 months within a community institution, an internal body, or a state.
3. A family member or known associate of a PEP ^
4. Any other situations that present a higher risk of ML (such as never meeting the client in person)

Question 10

What must a solicitor do if they suspect Money Laundering?

Answer 10

The must report it, as soon as practible, to the firms Nominated Money Laundering Reporting Officer and not proceed until recieved conset.

The Money Laundering Reporting Officer Must report via a SAR to the NCA if they suspect Money Laundering.

This should be done in the first instance online, but can be done by post or fax. The report should include:

1. The suspect and information (Address, Account Numbers, National Insurance Number)
2. Details of any other parties suspected to be involed
3. A clear description of why ML is suspected.

Question 11

What happens if a solicitor does not comply with the requirment to report under The Money Laundering, Terroist Financing and Transfer of Funds Regulation?

Answer 11

They would have commited an offence under the Proceeds of Crime Act.

Question 12

What are the 2 types of offences under the Proceeds of Crime Act?

Answer 12

1. Direct Inolvment Offences (Money Laundering)
2. Non Direct Inolvment offences - Where the Solicitors fails to appropriately respond to Suspected Money Laundering.

Question 13

What are the 3 Non Direct Inolvment offences of the Proceeds of Crime Act?

Answer 13

1. A solicitor fails to report to the Nominated Money Laundering Reporting Officer, as soon as PRACTICABLE, where he knows, suspects, or has reasonable grounds to suspect ML.
2. Nominated Money Laundering Reporting Officer failrs to make a SAR report to the NCA as soon as practiable where he knows, suspects, or has reasonable grounds to suspect ML.
3. Tipping Off - to suspected or third party that an investigation is being carried out or complated if this can prejudice the investigation.

Question 14

What are the 3 Direct Inolvment offences under the proceeds of Crime Act?

Answer 14

A solicitor is guiltu of he:

1. Conceals, Disguises, Coverts or transfers criminal property, or removes from the UK (Money Laundering)
2. Becomes involved in an arrangment suspected of Criminal Property on behalf of another person (ML for someone else)
3. Acquires, uses, or has posession of criminal property (Ie where they are not involved, but is paid / recieves a benifit from Criminal Money)

Question 15

What are the 6 defences to Money Laundering Offences under the Proceeds of Crime Act?

Answer 15

1. Consent (Defence against Money Laundering)
2. Reasonable Excuse Defence
3. Adequate Consideration Defence
4. Training Defence
5. Privaledge Circustances Defence
6. Legal Overseas Conduct

Question 16

What is the Consent (Defence against Money Laundering) Defence under the Proceeds of Crime Act?

Answer 16

Once a SAR report has been made, the NCA can give consent to continue.

If no response within 7 days, solicitors can presume consent.

Question 17

What is the Reasonable Excuse Defence under the Proceeds of Crime Act?

Answer 17

Where there was a reasonable excuse for not making a disclosure.

Question 18

What is the Adequate Consideration Defence under the Proceeds of Crime Act?

Answer 18

Where the Solicitor was paid using criminal money, if they did not know this was the case, and the amount paid was an adequate amount (ie not substantially higher)

Question 19

What is the Training Defence under the Proceeds of Crime Act?

Answer 19

Where the firm has not provided adequate training on Money Laundering and the Solicitor did not know or suspect Money Laundering.

Question 20

What is the Legal Oversees Conduct Defence under the Proceeds of Crime Act?

Answer 20

Where the criminal conduct occurred abroad and was legal in that country, and in the UK the offence would not be punishable by more than 12 months in prision.