Week 2 - Money Laundering Flashcards
What’s money laundering?
The process by which the proceeds of crime are converted into assets that look like they have a legal source rather than an illegal source.
What’s the aim of money laundering?
The aim is to disguise the source of the property to allow the holder to enjoy it free from suspicion as to its source.
What’re the 3 penalties of money laundering?
- Laundering
- Failure to Report
- Tipping Off
What’s the Proceeds of Crime Act 2002?
Primary source of legislation regulating Money Laundering.
What’re the 3 phases of Money Laundering?
- Placement
- Layering
- Integration
What’s Placement?
The initial disposal of the proceeds of crime into an apparently legitimate business activity or property.
What’s Layering?
The transfer of money from business to business to conceal the source.
What’s Integration?
The result of the previous steps whereby the money takes a legitimate appearance.
How does Failure to Report regarding Money Laundering work?
Individuals who’re carrying on a ‘relevant business’ must disclose knowledge or suspicion of money laundering where they know or suspect, or have reasonable grounds for knowing and suspecting
A ‘relevant business’ includes banks, accountants and lawyers.
Must disclose to MRLO or NCA.
What is tipping off in regards to money laundering?
An offence to make a disclosure likely to prejudice a money laundering investigation.
What’s the penalty for money laundering?
- 14 years maximum imprisonment
- Unlimited fine
What’s the penalty for Failure to Report/Tipping Off?
- Maximum 5 years imprisonment’
- Unlimited fine
What does the secondary legislation for Money Laundering Regulations 2017 require?
Firms to put preventative measures and staff training in place.
- Client ID and address - proof
- Sources of Income and Capital
Which professions and firms does the Money Laundering Regulations 2017 affect?
- Financial firms – banks, building societies, bureaux de change, savings and investment firms
- Accountants, lawyers, insolvency practitioners, estate agents and all gambling firms!
Name 2 examples of controls for investment firms in regards to Money Laundering
- Risk assessment on account opening
- High risk PEP, trusts, jurisdiction, source of funds
- Risk assessment drives documentation required (types, originals vs copies, look through to beneficial owners etc)
- Account opening documentation received
- Checked for consistency (nationality etc)
- Details submitted to international database for sanctions, criminal hits etc
- Any hits verified or false positive
Based on risk assessment document review, update and database check periodically (but no less frequent than annually) - Mandatory staff training annually and documentation
- Board review of controls results and policy review
