Archive for August, 2009
26.08.09 BTC Challenges HMRC over right to view SAR’s on supervisor compliance visits
Posted by: BTC in General Information & FAQ's, HMRC News and Guidance, Professional Bodies on August 26th, 2009
BTC Challenges HMRC over right to view SAR’s on supervisor compliance visits
HMRC has published its Code of Practice for supervisory purposes for visits to businesses under Money Laundering Regulations (COP28). This Code of Practice tells you what you can expect from HMRC Supervisory staff and what they expect of you when they visit your business under the Money Laundering Regulations 2007.
This is a simple but very helpful document for preparing for a supervisory visit under the Regulations, however one item contained within the documents raised concern for Steve O’Neill of BTC, namely;
Examples of business records the officer is likely to want to see include:
“Records/copies of suspicious transactions, action taken, copies of any Suspicious Activity Reports (SAR’s) submitted to the Serious Organised Crime Agency and any correspondence from them concerning consent. We will look at Suspicious Activity Reports for anti-money laundering legislation purposes only and not for tax purposes”.
It is Steve O’Neill’s (Business Tax Centre’s BTC) understanding that SAR’s are an individual’s obligations covered under the Proceeds of Crime Act and not covered under the Money Laundering Regulations which covers a ‘Firms’ obligations to put into place appropriate policies and procedures for the prevention, detection and reporting of suspicious activity, and not the actual SAR itself which has a subjective test and offences which are covered in PoCA.
When HMRC regulatory team was asked about their powers to view a SAR, they responded by way of reference to two sections of the Regulations. One of these references was to CDD only and the other to refers to the ‘Policy and Procedures’ for reporting.
These correspondences have been passed on to other supervisory authorities who can confirm that their opinion also states that the ML Regulations do not give authority for a supervisor to view a SAR, which should only be done by an accredited and trained financial investigator.
We understand from a response received from these bodies that this subject will be raised with HMRC at the next ‘affinity group’ meeting of accountancy and taxation supervisors.
If HMRC point of view is upheld, then the Treasury approved CCAB guidance and the notes of each professional boy will need to be updated accordingly. We will post updates as we receive them.
Visit the BTC website for compliance help and support for firms in the regulated sector.
20.08.09 HMRC has published its Code of Practice for supervisory purposes for visits to businesses under Money Laundering Regulations (COP28).
Posted by: BTC in General News & Cases, HMRC News and Guidance, Professional Bodies on August 20th, 2009
HMRC has published its Code of Practice for supervisory purposes for visits to businesses under Money Laundering Regulations (COP28). This Code of Practice tells you what you can expect from HMRC Supervisory staff and what they expect of you when they visit your business under the Money Laundering Regulations 2007.
The type of businesses that is required to register with HMRC under the Money Laundering Regulations and be supervised accordingly are;
- Money Service Businesses
- Trust or Company Service Providers
- Accountancy Service Providers
- High Value Dealers
The focus of the visit will be on your business’s risk sensitive anti-money laundering policies and procedures to make sure they successfully manage and reduce the money laundering and terrorist financing risks faced by your business.
During a visit HMRC supervisory staff we will always:
- check that the information held on the HMRC register is correct
- check that the right people within Money Service Businesses and Trust or Company Service Providers have undergone the fit and proper test
- ask you to explain how your risk sensitive anti-money laundering policies and procedures work
- answer any questions you have on your legal responsibilities under anti- money laundering legislation
- look at your risk assessment of the business’s customers, products and services
- look at the anti-money laundering policies, procedures and training you have implemented to manage and reduce the risks you have identified.
They may also:
- examine transaction records and related documents to check that the customer due diligence measures have been adequately applied
- evaluate your systems for identifying and reporting suspicious activity to the Serious Organised Crime Agency
- check that your staff are aware of the law relating to money laundering and terrorist financing and are sufficiently trained to recognise and deal with suspicious activity
- ensure you have adequate systems in place to manage your compliance with the Money Laundering Regulations 2007.
If you are a Money Service Business or High Value Dealer HMRC may inspect any cash found on the premises.
The full document can be downloaded in PDF format by clicking on the following link HMRC Guidance COP28
Visit the BTC website for compliance help and support for firms in the regulated sector.
10.08.09 JMLSG to Update AML Best Practice
Posted by: BTC in AML Legislation updates, Professional Bodies on August 18th, 2009
Proposed amendments to key AML guidance in the UK were released on August 10th by the Joint Money Laundering Steering Group (JMLSG), a group of leading UK financial services trade associations that includes the British Bankers Association. JMLSG guidance is seen as the standard for AML compliance.
Over recent months, the JMLSG carried out a review of its Money Laundering Guidance (“Guidance”) for the financial sector. The newly released amendments cover Part 1 of the text. Further amendments to Part 2 are still under consideration.
Important revisions to the Guidance have taken place at various stages in order to reflect the implementation of AML and CTF laws and regulations. Amendments to Part 1 of the text are minor in nature and include, inter alia, the following:
- Further clarification of the MLRO’s role has been introduced and the Guidance now states that the decision over whether to make a SAR should not be subject to the review of others. It clearly sets out that any decision made must be that of the MLRO and should not be exposed to the direction or approval of other parties within the firm.
- An additional category of customer has been added to the Guidance at paragraph 4.16. It is suggested that along with PEPs and activities involving large amounts of cash, firms should also be on alert when faced with customers who are engaged in industries that might relate to proliferation activities (transfer or export of nuclear, chemical or biological weapons, their means of delivery and related materials).
- At chapter 5, a new category of customer is added to the Guidance. ‘Clients who are listed on exchanges that are not equivalent’ are still subject to some degree of accountability and transparency. The Guidance suggests that as part of their risk-based approach, firms should have regard to the listing conditions that apply in the relevant jurisdiction when deciding whether that company falls into the private company category and consequently one that is deemed to have clear and comprehensive structure, ownership, purposes and activities.
- Other amendments to this chapter comment on PEPs and make it clear that it is for each firm to decide the steps required to implement EDD in respect of higher risk customers. Examples are provided of some jurisdictions that make it illegal for (a generally defined list of) PEPs to hold foreign bank accounts, some require asset declarations to be made and others will make this information publicly available.
- The Guidance now states that the power for firms to carry out EDD is contained within section 7 of the Counter-Terrorism Act 2008. Following the Royal Assent of this piece of legislation in February 2008, section 5.8 was added to the Guidance. The Guidance sets out the circumstances in which HM Treasury has the power to issue directions to firms in the financial sector in relation to their CDD. The Guidance also sets out the types of directions that may be imposed.
Firms must remain vigilant when it comes to updating their AML/CTF policies and procedures. A constant awareness of the changing legislation and resulting amendments to the Guidance is essential. By remaining sufficiently flexible, responsive and well resourced, firms will ensure they better protect themselves from the risks associated with financial crime.
Visit the BTC website for compliance help and support for firms in the regulated sector.
05.08.09 Passwords stolen for tax returns
Posted by: BTC in General News & Cases, HMRC News and Guidance on August 6th, 2009
Gangs are stealing taxpayers’ passwords and submitting claims for tax refunds to be paid to them, HM Revenue and Customs has warned.
A series of attempted fraudulent claims through the self-assessment repayments system has been discovered.
No figures have been released outlining the extent of the fraud, but a HMRC spokesman said this was a new method of trying to extract money.
He urged people to ensure passwords sent to them by HMRC were kept secure.
“They should treat these details as carefully as they would a Pin for their bank account,” he said.
Attempt
More than 9.5 million taxpayers are in the self-assessment system, which was changed this year to encourage more people to submit their details via the internet.
Two-thirds of all filings for 2007-08 were submitted via the internet, rather than on paper.
When people apply to use the system they are sent a password through the mail which is then used when the taxpayer logs onto the HMRC website over the following 30 days.
However, fraudsters have been getting hold of these passwords and other personal details. This could have been by stealing the mail, tricking people out of the details or even finding the letters discarded in bins.
They then used these details to make fraudulent repayment claims, requesting funds be sent to other bank accounts.
The HMRC spokesman said this was different from so-called phishing e-mails which pretended to be from the tax authority and aimed to discover taxpayers’ banking details so their accounts could be raided.
Liability for any losses would be judged on a case-by-case basis, he added.
04.08.09 FSA bans Cornwall broker for fraud
Posted by: BTC in General News & Cases, HMRC News and Guidance, Professional Bodies on August 4th, 2009
The FSA has banned Cornwall mortgage broker Stephen Sanders for submitting at least three mortgage applications on behalf of customers which he knew contained false and misleading income information.
Sanders withheld information from a prospective employer relating to an investigation into him by his former employer which resulted in his suspension. He also failed to disclose to the FSA that he was the subject of an ongoing disciplinary investigation into his conduct by his former employer when applying to the FSA to perform a controlled function.
For the first customer mortgage application, the income as stated in the mortgage application, was substantively higher that that declared by the customer to HM Revenue & Customs (HMRC). In the second mortgage application the income stated in a mortgage application included some of the income of the customer’s parents which was falsely described as his own. And in the third case there were discrepancies in the application about the income sources of the two customers who were making a joint application.
Margaret Cole, director of enforcement at the FSA, said: “Sanders submitted mortgage applications which he knew to be false and this posed a serious risk to lenders and confidence in the financial system. Our work on mortgage fraud continues as a priority in our campaign against financial crime.”
She added: “We have banned more than 60 mortgage brokers over the last three years and we will continue to ban such people to reinforce the message that knowingly giving false and misleading information to prospective lenders is dishonest. Approved persons must also be open and honest with the FSA and prospective employers about their circumstances. Behaviour which shows lack of honesty and integrity will result in a ban.”
Visit the BTC website for compliance help and support for firms in the regulated sector
03.08.09 Identity fraud soars in 2009
Posted by: BTC in General Information & FAQ's, General News & Cases on August 3rd, 2009
New Cifas stats paint bleak picture for the UK’s financial institutions and card companies.
Identity fraud surged by nearly three quarters in the first half of the year, driven by continued malicious online activity, and the economic slowdown, according to new figures from UK fraud prevention service Cifas.
The organisation was set up to facilitate the sharing of information on identified fraud between its members – which include banks, card companies and insurance firms – in an attempt to prevent further rises in all types of fraud, including online.
It said identity fraud, which includes victims of impersonation as well as the creation of fictitious identities by fraudsters, rose 74 per cent in the first six months of 2009 to over 100,000 cases.
Facility take over fraud – where the fraudster gains access to a user’s account and siphons off funds – rose 40 per cent during the period with over 11,000 cases registered.
There was some good for fraud departments however, with Cifas reporting an 11 per cent year-on-year increase in the financial losses avoided through the fraud data sharing of its members.
“The rise in the numbers of victims, and these very specific types of fraud demonstrate that fraudsters have no regard for economic, social and personal fragility,” argued Cifas chief exeutive Peter Hurst.
“While we all look for solutions to the hardships imposed by the current climate, however, these figures focus attention sharply on what responsible businesses and public sector organisations can achieve through sharing data on proven frauds to reduce losses and ease the burden of the recession upon us all. ”
Although not broken out in the survey, it’s believed that much fraudulent activity committed today is card not present (CNP), including online, fraud.
Visit the BTC website for compliance help and support for firms in the regulated sector
