HM Treasury (HMT) have published the results of their consultation on the UK’s implementation of European Union (EU) Regulations 44/2009 and 45/2009, requiring Currency Exchange Offices and Money Transmitters to have procedures in place selectively to check euro notes and coins using an approved method.

Following the consultation, the Government has decided to create a new criminal offence for failure to comply with the checking requirements of the EU regulations in relation to counterfeit euros.

You can read the full report by following the link below.

UK enforcement measures for EU Regulations 44/2009 and 45/2009 on counterfeit euros on the HMT website (Opens new window)

With the agreement of Richard Braysher of 2 High Road, Eastcote, Pinner, Middlesex, HA5 2EW, the Investigation Committee made an order that the member be severely reprimanded, fined £5,000 and pay costs of £1,280 with respect to a complaint that:

1 Between 28 September and 3 March 2010 Mr Braysher failed to comply with written assurances he had given on or about 28 September 2006 following a Quality Assurance Visit that he would:

Under the Money Laundering Regulations 2007:
a. have procedures in place to perform on-going client due diligence;
b. attend external training on the money laundering regulations and;
c. undertake a compliance review.

As a result the Treasury has announced that stocktakers who do not carry out bookkeeping or other accountancy services will be exempt from the Money Laundering Regulations (MLR) 2007 from Saturday 1 October 2011.

This means that they will no longer need to register with HMRC.

This decision also supports the Government’s policy of reducing regulatory burdens on businesses.

HMRC continue to encourage stocktakers to be diligent and report suspicious activity to the Serious Organised Crime Agency (SOCA). More information can be found at www.soca.gov.uk.

Stocktakers who offer bookkeeping or other accountancy services will stay on HMRC’s register.

From Monday 3 October 2011 HMRC will be writing to the stocktaking businesses already registered with them to give the opportunity to de-register for MLR.

If you do not receive a letter from HMRC but wish to deregister, you should write to the registration team to let them know. Your letter should include details of your registration number and the reason you wish to deregister.

The address for applications to deregister is:

MLR Registration Team
7th Floor Central
Alexander House
Southend on Sea
Essex
SS99 1AG

On 18 June 2010 the case manager wrote to Mr Honeywell asking him to provide additional information to address the outstanding issues arising from the visit. These are summarised as follows:

Details of the steps he has taken to establish the adequacy of the money laundering procedures undertaken by social services on clients that are referred to him and the basis on which he is able to rely on these procedures

Just before the hearing day, the defendant’s solicitors wrote to the tribunal putting forward various points said to be in mitigation. This included that the Practice Assurance visit had ‘passed’ the defendant’s practice in most aspects and that it was unrealistic to expect the Money Laundering Regulations to apply in relation to clients in receipt of social services funding for their care.

The tribunal did not view either of these points as mitigation. First, Chartered Accountants can be expected to comply with professional standards and partial compliance does not excuse what amounted to a wilful refusal to cooperate with the ICAEW with regard to the areas of non-compliance. In relation to the Money Laundering Regulations, whilst the defendant’s conduct did not amount to the most serious of breaches, the defendant had failed to show any willingness to engage with the ICAEW on this. Had he done so and discussed how he could carry out a modified version of identity checks and thereby compliance, the tribunal might have been more sympathetic.

It was the role of the ICAEW to maintain the standards amongst the profession of chartered accountancy. An important part of this is the Practice Assurance. An equally important part of a chartered accountant’s professional standards and indeed the protection of the public, is compliance of money laundering requirements. The defendant had fallen below the professional standards expected of chartered accountants.

The tribunal ordered that Peter Royston Honeywell FCA be severely reprimanded, pay a fine of £5,000 and costs of £2294

The register is a useful tool for sharing intelligence about businesses which might be used for money laundering and will help HMRC with its work ensuring compliance and supervision of the Money Laundering Regulations. In particular, it will help law enforcement agencies differentiate between MSBs complicit in money laundering or terrorist financing and those who are complying with the Regulations. In a recent case, for example, the manager of a bureau de change was found to be involved in laundering millions of pounds made from drug trafficking.

If the pilot is successful access to the register will given to law enforcement agencies across the country.

Consent Orders made on 28 July 2010

With the agreement of Michael Martin Shenker of 5Wellesley Court, Apsley Way,
London NW2 7HF, the Investigation Committee made an order that the member be
severely reprimanded, fined £5,000 and pay costs of £2,075 with respect to a
complaint that:

Between 7 June 2005 and 16 February 2006 Mr M M Shenker FCA failed to comply with
statement 1.304 of the Members Handbook in that he failed to make a suspicious activity
report on a timely basis to the National Crime Intelligence Service when he had a
suspicion or reasonable grounds to suspect that Mr X’s activities in relation to the
business of Y Limited were unlawful. D6496

The normal risk based approach and customer due diligence measures must be applied by money transmitters when an individual is sending their own money to either family members or to a relief organisation in Pakistan.

If money collected by a charity or religious organisation is being sent we recommend that you do the following.

• Check the identity of the person arranging to send the money.
• Obtain the name and address of the charity or religious body.
• Check on the Charity Commission website (Opens new window) to confirm the organisation is a registered charity and obtain confirmation that the person is a genuine representative of the charity or religious organisation. Many of the charitable and religious organisations with links to Pakistan are registered with the Charity Commission.

If the organisation is not on the register you may still undertake the transaction but you should make further enquiries to satisfy yourself that the money being transmitted is not terrorist financing or the proceeds of crime.

The further enquiries could include questions about how the money was collected and enquiring about who it is being sent to. If after making further enquiries you are not satisfied that this is genuine you should consider making a suspicious activity report to the Serious Organised Crime Agency.

It does come as no surprise, therefore, that the Financial Services Authority (FSA) has recently censured and banned three directors from acting as senior managers for failing to meet their supervisory standards. The FSA investigation found that the directors had been relying too heavily on external consultants for advice on how to run their business.

It is equally unsurprising then that HM Revenue & Customs (HMRC) have also announced that they take the same view to the FSA in relation to businesses meeting their obligations under the Money Laundering Regulations.

HMRC also state that they have no objections to businesses getting advice from external consultants regarding their obligations under the Regulations, as long as the responsibility for complying with the Regulations remains on the business rather than any consultant.

What does come as a surprise is that some consultants, who should frankly understand the Regulations better, have recently offered their services to act as the Nominated Officer for a business. HMRC has no formally announced that it does not consider that a consultant outside the business can be appointed Nominated Officer for any of the businesses HMRC supervise under the Regulations.

The new guides will be available on-line only. This follows on from HMRC’s announcement on 12 April 2010 that they would stop sending printed copies of Public Notice MLR8 to businesses we supervise and publish MLR8 on the internet only. All relevant businesses should now refer to the internet when they need to check anti money laundering guidance. Printed copies of the current Public Notice MLR8 Preventing money laundering and terrorist financing dated August 2008 have now been withdrawn.

The new anti money laundering guides are as follows:

• Anti money laundering guidance for Money Service Businesses
• Anti money laundering guidance for High Value Dealers
• Anti money laundering guidance for Trust or Company Service Providers

The guidance should make it easier for businesses to understand what is required of them under the Money Laundering Regulations and other legislation.

Money Service Businesses (MSBs) should note that the Counter-Terrorism Act guidance has been incorporated into the ‘Anti money laundering guidance for Money Service Businesses’ this is available at Appendix 7 of the guidance. This will assist them in complying with the terms of a direction which is a legal requirement.

MSBs should also be aware that guidance for E-money issuers will be incorporated and published in the new guidance shortly.

High Value Dealers should note that guidance on proliferation financing risks will be incorporated and published in the anti money laundering guidance for High Value Dealers shortly.

Accountancy Service Providers (ASPs) should continue to refer to the Consultative Committee of Accountancy Bodies (CCAB) guidance. HMRC are considering whether they can provide specific sectorial advice for Accountancy Service Providers on their Money Laundering Regulations website.

This would be a welcome move. Most professional bodies have already written simpler guidance than the CCAB, for the members they supervise and many will be aiming for HM Treasury approval for them. It would not seem wise to leave those in most need of simplified sector guidance with only the complex CCAB guidance to reply upon.

HMRC now state that between the four sectors they have responsibility for supervision they now have over 18,000 registered firms, of which just over 14,000 are accountancy service providers (ASP’s) or trust and company service providers (TCSP’s).

HMRC has not yet, in any force, started compliance visits to either TCSP’s or ASP’s, so therefore there compliance visits have been focused upon the remaining 6,000 money service businesses and high value dealers.

In just the eight month period between September 2009 and April 2010 HMRC compliance officers carried out 908 visits to businesses, this is a tremendous figure, with almost 15% of all firms having a visit in that period. This rate of supervision has to be commended; however, unless the rate must fall considering the sheer volume of ASP’s that must come under the supervision of HMRC.

The other interesting statistic to come from these visits was that 193 warning letters were issued, which is just over 21% of the firms visited. If you look at it from the opposite point of view, almost 80% of businesses visited had made good attempts at coping with aml compliance. That has to be good news.