Category: General Information & FAQ’s

General AML information and common FAQ’s

  • 03.08.09 Identity fraud soars in 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

  • 22.04.09 MLR – acting for family members

    If you have known somebody as a close relative for 40 years do you still need to ID him before accepting instructions?

    AccountingWEB.co.uk 22-Apr-2009

    Common sense approach
    This post assumes that you are acting for your friends and relatives’ by the way of businesses and not in just a ‘family’ capacity which was never designed to be a part of the ML Regulations, for example a wife doing the books for her husband who may be a plumber

    The Regulations actually state “identifying the client and verifying the client’s identity on the basis of documents, data or information obtained from a reliable and independent source;” Nowhere in the Regulations states that you must have documentary evidence on any client.

    Information may be in any form, including word of mouth or personal experience etc, someone you know and trust may confirm a clients identity, your mother may confirm that the gentleman you are acting for really is your father (hopefully), and indeed you have probably visited your mothers house so you have information as to the home address.

    We already know that it is not in the public interest to prosecute a regulated person who may commit a trivial or technical breach of the Regulations, this has been stated by SOCA and other law enforcement agencies, so you will should not receive any penalty for not having a copy of your mothers’ passport, so an element of common sense prevails. So document that it is your father and you been to his house, this would suffice for any Supervisory staff who may ask, if it does not then I would suggest that the supervisor gets retrained.

    The problem with friends and relatives is not the knowing of who they are, but are you independent enough to effectively ‘police’ them. For example, you act for your farther and you discovered you father was involved in drugs dealing, could you file a SAR on him? If you could not, you stand a very good chance of being investigated along side your relative for those offences since you are ‘aiding and betting’ by turning a blind eye, especially if you continue to act. You can choose who you act for, who you want to be friends with, but in some respects you cannot choose your relatives.

    Do not forget that a risk assessment is mandatory for all clients, including your relatives; here you would document your policy of what you would do to mitigate any potential risk of loosing your independence because of your association with the client relative. For example, your firm may be the agent, but an independent member of staff may complete most of the initial work.

    Steve O’Neill
    Business Tax Centre

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • 16 March 2009 HM Treasury warns businesses of serious threats posed to the international financial system

    The Financial Action Task Force (FATF) has announced that it remains concerned by Iran’s failure to meaningfully address the deficiencies in its Anti-Money Laundering and Combating Terrorist Financing (AML/CTF) regime, particularly in respect of terrorist financing and suspicious activity reporting.

    The FATF has called on its members to consider effective countermeasures to protect their financial sectors from risks emanating from Iran, and to protect against the use of correspondent banking relationships to bypass or evade counter-measures and risk mitigation practices.

    All UK businesses regulated under the Money Laundering Regulations 2007, whether Money Service Businesses or other regulated persons should treat transactions associated with Iran as situations that by their nature can present a higher risk of money laundering or terrorist financing, and which therefore require increased scrutiny, enhanced due diligence, and ongoing monitoring. In the light of the call for countermeasures the UK is, in addition, considering what further action is required.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • 19/02/09 Increase in the Money Laundering annual registration fee

    HMRC today announce an increase of the annual registration fee for businesses registered under the Money Laundering Regulations 2007 to £120. The sectors affected are Money Service Businesses, High Value Dealers, Trust or Company Service Providers and Accountancy Service Providers.

    The Money Laundering Regulations supervisory regime is run on a full cost recovery basis and the fees you pay cover the expense of running the operation. HMRC costs include registering new businesses, contacting and visiting businesses, running an effective risk system, maintaining the register and producing guidance and information for customers.

    Introduced in 2002, the fee was initially set at £100, and was subsequently reduced to £60 from June 2003. There were no changes until 1 June 2007, when the fee was increased to £95; this level was maintained in 2008.

    HMRC state that it is now necessary to increase the fee further in order to provide them with sufficient income to cover their costs over the next year. The cost of registration from 1 June 2009 will be £120 per premises.

    If you are a registered Money Service Business, High Value Dealer, Trust or Company Service Provider or Accountancy Service Provider, you do not need to do anything now. Your next fee renewal notice (MLR 113) will be sent to you as normal and will be based on the new fee level.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Ongoing Monitoring – What are the practical implementations for existing clients?

    Do the requirements to carry out ongoing monitoring of customer due diligence measures and client’s business relationships mean that you must obtain a passport and utility bill from your existing clients or that you must investigate all the business affairs of your clients?

    For many existing clients which date from 1 March 2004 you will have obtained verification of their identity under the 2003 regulations. For those clients you will need to consider whether the information you hold is sufficient, based on your risk assessment of the client , to demonstrate your have taken appropriate steps to verify the identity of your client and whether anything has changed in the period to render that information out of date. For clients whose situation, address, name and business has not changed since you last considered their identity we would suggest you need do no more than commit your risk assessment and review to the file.

    For clients where the situation has changed or who predate 2004 you may well have obtained official verification of matters such as name and address through correspondence with government offices, bank statements and similar official channels. It is suggested that you undertake these checks during the planning for the next engagement for the client.

    The key issues are:

    • Have you undertaken a risk assessment of the client ?
    • Do you have information which supports your verification of the client’s identity and which is consistent with your risk assessment?
    • Can you demonstrate what you have done if asked to evidence your customer due diligence measures?

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • New ID card for foreign nationals being introduced from the 25 November 2008.

    Documentary evidence of identity (ID) – new ID card for foreign nationals being introduced from the 25 November 2008.
    The Money Laundering Regulations require relevant businesses to carry out Customer Due Diligence on their customers. This may involve asking for documentary evidence of a customer’s identity. The UK Borders Agency has announced a new ID card for foreign nationals which will begin a roll out programme starting on the 25 November 2008.

    It is important that you are aware of this new ID card, its significance as documentary evidence of ID, the information it contains and how you can recognise it as a genuine document.

    The card will be issued to migrants from countries outside the European Economic Area (EEA) applying for leave to remain in the UK. Initially they will only be issued to migrants in the category of a student or on the basis of marriage or partnership from the 25 November 2008 though it will be rolled out to other categories of migrants in the future.

    Over time, the card will replace vignettes (stickers) and stamps in passports and will act as a standalone grant of leave to stay in the UK, but is not a travel document and therefore holders who wish to travel abroad must still have a valid passport.

    The card can be accepted as a form of identification though there is no requirement that holders of the card must carry their ID card on them at all times. The card will contain the following information relevant to the holder:
    • digital image of the holder
    • name
    • valid until date
    • place and date of issue
    • type of permit – the immigration category of the holder
    • immigration entitlements for the length of the holders stay
    • unique card number
    • signature
    • microchip that contains the biometric features of the holder (a facial image and two fingerprints)
    • gender
    • date and place of birth
    • nationality

    Although the card can be used as a form of identification, it is important in these circumstances to be aware of the security features of the card.

    Some of the features are that:
    • the card number is unique and consists of two letters followed by seven numbers
    • the back of the card has a raised design and has an image incorporating from left to right a shamrock, daffodil, thistle and rose which can be seen by shining a light across the card
    • as you tilt the card, various designs can be seen showing distinctive colour changes and large amounts of fine detail

    You can get further advice or assistance on verifying the cards security features by telephoning the UK Border Agency card verification helpline on 0300 123 4699 or you can view images of the card by visiting the UKBA website.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Q. When do I submit a SAR to SOCA?

    The Proceeds of Crime Act 2002 expanded, reformed and consolidated the UK’s criminal money laundering offences. Most of the offences under the Act apply to all individuals and businesses in the UK, however, some apply only to those doing business in the ‘regulated sector’.  

    A SAR should be made as soon as the knowledge or suspicion that criminal proceeds exist has arisen, especially if consent may be required, or at the earliest opportunity thereafter.

    SOCA’s preferred method for reporters to submit their suspicion is the SOCA Suspicious Activity Report Form. SOCA prefers these forms to be submitted electronically but hardcopy versions of the forms (including Limited Intelligence Value Reports) can be found on the SOCA website or obtained directly from SOCA. These can then be posted to the address below. Hardcopy consent requests should be faxed to 0207 238 8286.

    If you currently submit by post but would like to report electronically visit the SAR Online System or alternatively contact the Money.web support team

    Acknowledgement Letters
    SOCA will not acknowledge any SAR sent by fax, post, or by letter. Electronic submissions through money.web, bulk submission or through the SAR Online system, will receive an acknowledgment which will include an automatically generated ELMER reference number.

    If you have submitted a consent request, the Consent Team will contact you directly with the decision by telephone within the seven day notice period, and then post the appropriate letter to you as confirmation.

    If you have any queries relating to acknowledgments please write to the SAR Team at UKFIU, PO BOX 8000, London, SE11 5EN.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Q. What is an external accountant or tax advisor?

    The CCAB Guidance on this point says:  “Regulation 3(7) defines external accountant as someone who provides accountancy services by way of business to other persons, when providing such services.

    Accountancy services include the recording, review, analysis, calculation or reporting of financial information and covers professional bookkeeping services, preparing or signing accounts or certificates of financial information concerning a person’s or organisation’s financial affairs, and advising on tax.

    Tax advice is widely interpreted and includes tax compliance services such as assisting in the completion and submission of tax or duty returns. Businesses assisting in the completion and submission of tax returns in relation to any tax will fall within the scope of the Regulations. Businesses providing advice relating to the liability of a particular commodity to a tax or duty or the amount of tax or duty due will also fall within the scope.

    Therefore any bookkeeper, payroll bureau, accountancy service provider, tax advisor of any grade or level, qualified or unqualified will have obligations under POCA and if operating as a businesses will have an obligation to register for compliance supervision before commencing businesses.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Q. What is Customer Due Diligence?

    Customer Due Diligence (CDD) is a key part of the anti-money laundering requirements. They ensure that businesses know who their clients are, what their clients business are and do. They help ensure that you do not accept clients unknowingly which are outside your normal risk tolerance, or whose business you will not understand with sufficient clarity to be able to form money laundering suspicions where appropriate. If businesses do not understand its client’s regular business pattern of activity it would be very difficult to identify any abnormal or suspicious activity.

    The 2007 Regulations provide an outline of the required components of CDD which is undertaken on a risk sensitive basis. Regulated firms need to ensure that these are integrated into client acceptance procedures and for the continuing monitoring of the business relationship. The three basic components are;-

    (1) Identifying the client and verifying the identity of the client by obtaining evidence from documents, data or information obtained from indepenant and reliable sources.

    (2) Identifying the beneficial owner(s) of a client, if there is one, so that the identity of the individual(s) who is the ultimate owner or controller is known and then verify their identities on a risk sensitive basis. Specific steps must be taken is ensure that the ownership and control structure is understood. 

    (3) Information on the purpose and intended nature of the business relationship

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Q. What are the Specific Breaches of the Money Laundering Regulations?

    The specific failings and breaches which are clearly defined within the Money Laundering Regulations 2007 are;

    • Regulation 7 – Failure to apply appropriate risk-sensitive customer due diligence measures
    • Regulation 8 – Failure to apply appropriate and risk-sensitive ongoing monitoring of a business relationship
    • Regulation 9 – Failure to comply with the requirements in timing of verification of identity of clients and any beneficial owner
    • Regulation 11 – Continuing with transaction/business relationship where unable to apply customer due diligence measures
    • Regulation 14 – Failure to apply enhanced client due diligence and ongoing monitoring where required
    • Regulation 18 – Failing to follow a direction made by HM Treasury under this Regulation
    • Regulation 19 – Failure to keep the required records
    • Regulation 20 – Failure to establish, maintain, monitor and manage the required risk based policies and procedures
    • Regulation 21 – Failure to take appropriate measures to provide the required training
    • Regulations 26, 27(4), 33 – Failure to comply with registration requirements specified by the commissioners

    These breaches may attract civil or criminal procedures from your supervisor