Tag: customer due diligence

  • Economic Crime Act Part 2

    The reform of Companies House under the Economic Crime Act Part 2 represents a significant step towards enhancing transparency, accountability, and the fight against economic crime in the United Kingdom. Companies House, the registrar of companies in the UK, plays a vital role in maintaining accurate and up-to-date information about businesses operating within the country. However, over the years, concerns have been raised about the misuse of this information for illicit purposes, such as money laundering, fraud, and the facilitation of illegal activities.

    The Economic Crime Act Part 2 aims to address these concerns by introducing a series Economic of reforms to strengthen the integrity of Companies House and improve its ability to combat economic crime. Some of the key provisions of the Act include:

    1. Identity verification: The Act introduces measures to enhance the verification of the identity of individuals who own or control companies. This includes requiring individuals with significant control (PSCs) over companies to provide more detailed and accurate information about their identity, such as their nationality and residential address. This will help to prevent the use of anonymous or false identities for illicit purposes.

    2. Information sharing: The Act enables better information sharing between Companies House and law enforcement agencies, such as the National Crime Agency (NCA) and the Financial Conduct Authority (FCA). This will facilitate the identification and investigation of suspicious activities, allowing for more effective enforcement of laws related to economic crime.

    3. Increased powers and resources: The Act grants Companies House additional powers and resources to carry out its functions more effectively. This includes the ability to query and investigate information submitted by companies, as well as the power to impose fines and penalties for non-compliance or the provision of false information.

    4. Beneficial ownership register: The Act mandates the establishment of a central register of beneficial ownership information, which will be accessible to law enforcement agencies and certain other entities. This register will provide a comprehensive and transparent record of individuals who ultimately own or control companies, helping to prevent the misuse of corporate structures for illicit purposes.

    5. Enhanced criminal offenses: The Act introduces new criminal offenses related to false information provided to Companies House, including the creation or alteration of company records with the intent to deceive. These offenses carry severe penalties, including imprisonment and fines, to deter individuals from engaging in fraudulent activities.

    The reform of Companies House under the Economic Crime Act Part 2 is a significant step towards strengthening the UK’s anti-money laundering and anti-fraud framework. By introducing measures to enhance transparency, verify identities, and improve information sharing, the Act aims to create a more robust system that can effectively detect and prevent economic crimes. These reforms not only protect the integrity of the UK’s business environment but also contribute to the global effort in combatting illicit financial activities.

  • Smart Search platform upgrade

    Important Service Update 

    We are required to inform you of this service upgrade. 

    The Smart Search platform upgrade is coming soon!

    In response to feedback, and as part of their commitment to continuous improvement, SmartSearch is pleased to announce that we will shortly be upgrading your platform.

    Built using the latest technology, the upgraded platform will ensure SmartSearch will remain at the forefront of the industry with exciting new features, whilst keeping the core functionality the same. 

    Benefits 

    • A new modern and seamless look 
    • New features to improve usability 
    • Improved service and performance levels 
    • Built on the latest technology, to enable a continuously evolving solution

    When will this change take place?

    The migration window will commence from late July.

    What about my data?

    Your data will continue to be the number one priority and is hosted exclusively in the UK, with all security controls being maintained during the migration process and beyond.

  • AML Compliance: European Union Blacklist for Tax Havens

    AML Compliance latest news: European Union Blacklist

    MEPs have called for a tightening of the rules on which countries are added or removed from the European Union blacklist and indicated that UK overseas territories such as the Cayman Islands, Bahamas, Jersey and Guernsey are among those which should be added to an EU tax havens blacklist after the conclusion of the Brexit deal, saying that Britain’s overseas territories should now be screened for potential inclusion on the list, and that the Brexit deal was based on “mutual values and geared towards common prosperity, which automatically excludes aggressive tax competition”. (more…)

  • Customer Verification using Biometric Facial Recognition

    Customer Verification using Facial Recognition

    Verification using facial recognition is becoming an increasingly popular part of the customer on-boarding process. Under government COVID-19 regulations, many prospective clients are no longer able to present their documents in person or using physical documents. With continued restrictions on social contact, firms that rely on paper-based ID checks are facing significant business disruption. These include:

    1. Lockdowns can make it difficult for individuals to get to post offices to send ID documents.
    2. There is an increased risk of contamination when sending physical documents.
    3. Working from home can sometimes make it risky to send sensitive personal data to staff home addresses.

    How can we help?

    Our electronic verification (EV) services solve all these issues so that regulated firms can carry on serving clients without disruption. In addition to our usual EV solutions, we offer Biometric Facial Recognition as part of the customer on-boarding process. These services apply to both UK and overseas individual checks.

    This helps to mitigate the risk that the “Customer not present” element of the Money Laundering Regulations presents when customers are unable to send physical identification.

     

    Customer Verification using Facial Recognition: How does it work?

    It is a simple process which uses digital copies of documents rather than their physical counterparts. A good scanned copy of any government issued document which features the customer’s face, such as a passport, can be used. The digital copy can be verified either by:

    • uploading it directly from the customer’s computer or
    • sending the client an upload link via a free SMS

    The customer is verified using biometric facial recognition on the digital document. The results include both a check on the document as well as facial recognition information. This is in addition to the usual AML UK residential report.

     

    Customer Verification using Facial Recognition: How much does it cost?

    The biometric facial recognition element is £15 + VAT in addition to the normal UK search rate.

    This offers incredible value in completing the on-boarding process in these difficult times. Furthermore, under proposed UK Government consultations it is likely that biometric facial recognition will become the preferred method of customer verification.

    Please contact us for more details or to arrange a quote. You may also be interested in our enhanced facial recognition service which uses TripleCheck.

  • Policies and Procedures AML Regulations 2017

    Policies and Procedures Templates for the Money Laundering Regulations 2017

    A complete set of templates which aids in the requirements in the Regulations for risk sensitive policies, controls and procedures which are able to demonstrate to a supervisor your firm’s specific policies, controls & procedures for AML. It includes:

    • Templates covering The firms’ Policy Statement,
    • Templates for the ‘Risk Register’ that is Risk Assessment & Risk Management controls and Procedures
    • Templates for Policy and management procedures for reporting both internally and to SOCA
    • A further ‘Tool Kit’ section packed with working papers and other relevant items to help you prepare your firms specific policies, controls and procedures.

    The documents are delivered electronically allowing for simple editing in word along with explanations and instructions of what is expected of you for each section.

    For further details click here

  • Anti Money Laundering verification platform

    SmartSearch is Ready for the 2017 Anti-Money Laundering regulations

    The unique SmartSearch Anti Money Laundering verification platform is enabling regulated businesses to comply with the latest 2017 Anti Money Laundering (AML) Regulations and fulfil their AML, Customer Due Diligence (CDD) and Know Your Customer (KYC) compliance obligations.   With no requirement for clients to provide identity documents, the SmartSearch is much more convenient and cost effective for both your firm and your clients.  

    The unique platform brings together both Individual and Business searches for the UK and International Markets with automatic Worldwide Sanction & PEP screening.” It will give you complete functionality to process any type of AML search all from a single and easy to use platform.  

    The Real-time hosting of all your businesses search activity and AML outcomes enables you to recall on-demand any AML outcomes to support an internal audit or an external visit from your supervisory body or regulator.  

    Access to the SmartSearch Platform through Business Tax Centre is on a ‘pay as you have used basis’ with no formal contractual amount payable, pay for your usage only.

  • European Parliament to Vote on the 4th Anti-Money Laundering Directive

    European Parliament to Vote on the 4th Anti-Money Laundering Directive

     

    The European Parliament on the 13th February will vote for legislative revisions to the current EU Anti-Money Laundering Directive (AMLD). This is a once-in-a-decade opportunity, the 3rd directive was voted on 17 December 2005. The proposed revised Anti-Money Laundering Directive should have a tremendous impact on the battles against corruption, drug trafficking, tax evasion and a range of other criminal activities all currently facilitated by the ease in which money can still be laundered across Europe today.

    The draft EU AMLD would, in part, require all companies registered in the EU to hold details of who really owns and controls them – their beneficial owners. This might not sound like much but consider this: in Europe less personal information is asked of a company opening a bank account than there is of an individual applying for a driver’s license, to rent a property or to simply obtain a library card.

    As a result, many companies are opened in names not associated with that of the person who really owns or controls them. And once a bank account has been opened in a false name, if illegal activity is suspected it is almost impossible to follow the money laundering criminal money trail back to the true beneficial owner.

    UK Companies Trust and Transparency

    Various reports and analysis of the UK’s system of Companies House receiving all information in good faith, by-passing the Money Laundering Regulations, have confirmed that the trust and transparency of company structures needs to be radically overhauled.

    As such a consultation document for changes to the way companies and Companies House had been released by the UK Government with many proposals concerning the Trust and Transparency of UK Companies. The changes from this consultation will mean bringing amendments to the Companies Act 2006.

    A public register would have made it more difficult for organised crime groups to use UK and other shell companies to launder huge sums of money. Over the last decades, many organised crime groups used UK companies to launder funds whilst many EU and UK citizens have simply used them as part of aggressive tax avoidance or even evasion schemes.

    Last year, the European Commission hired accounting firm Deloitte to look into the effectiveness of the current AMLD. They found that it did not do enough to combat international or even pan-European money laundering schemes.
    One of the short-comings high-lighted in the study was the difficulty in identifying beneficial owners. Not only can the due-diligence be a costly and time-consuming undertaking, but without substantial prohibitive measures in place, the incentive for obliged entities to chase down information about clients is sometimes missing.

    UK To Set Up Public Registers

    The UK has already announced that it will go a step further than other European countries and set up a registry of the beneficial owners of companies. This register will be publicly accessible.

    By sharing company ownership with all interested parties – including banks, law enforcement, journalists, citizens and obliged entities – The UK can ensure that adequate oversight is guaranteed and information is made available to those who need it. Obliged entities will be able to complete customer due diligence, law enforcement will be able to attach names to proceeds from crime, journalists can research political contributions or other questionable or even illegal donations (and many other stories of corruption) and average citizens or small businesses could, for example, know and understand who is behind their partners, suppliers or customers.

    Providing beneficial ownership information to the public registry does not require much from the companies beyond sharing information they should already possess, such as the company beneficial owner’s full name, date of birth, the means of exercising control over the company, contact details and information detailing the legal shareholders.

    SmartSearch Electronic Verification Reporting

    At BTC Corporate and Compliance we offer SmartSearch for AML Verification to our obliged entity customers for their CDD purposes. The SmartSearch platform does both individual and corporate AML compliance reporting. The business reports already highlight beneficial owners within the report and are of the standard of the 4th Directive. Over 1,100 sanctions and warning lists are used by integrating the Dow Jones watch list into all searches and allowing the user to drill down and see the information returned for any negative matches.
    We offer these searches on a non-contractual pay as you go basis.

  • Client Due Diligence – Beneficial Ownership list to be public, PM states

    David CameronA list of “shell” companies where firms keep money offshore will be published to discourage tax evasion, David Cameron has announced, making changes to client due diligence for obliged entities.

    Ministers had already announced the register, intended to lift the “cloak of secrecy” around company ownership contained within the consultation document for ‘Trust and Transparency For UK Companies’. This consultation also raised a number areas of weaknesses concerning ownership and control and will affect client due diligence procedures for regulated entities.

    More changes to the way UK companies declare ownership and control will be made by amendments to the Companies Act 2006 to bring the requirements in line with the fourth European Directive on Money Laundering and updated European Data protection Act, both expected to clear the European Parliament early 2014.

    The prime minister said making the register public will make it easier for firms and developing countries to know who they are doing business with. Labour, anti-corruption campaigners and charities welcomed the move.

    Speaking at the Open Government Partnership summit in London, Mr Cameron said a small minority of companies have hidden their business dealings in a “complex web of shell companies” for too long.

    Untraceable Trails

    “This cloak of secrecy has fuelled all manner of questionable practice and downright illegality,” he said.

    “Illegality that is bad for the developing world – as corrupt regimes stash their money abroad under different identities.

    “And illegality that is bad for Britain’s economy too – as people evade their taxes through untraceable trails of paperwork.

    “Not only is this hugely unfair to the millions of hard-working people in Britain who pay their tax but it’s also bad for business.”

    Mr Cameron made tax transparency a key issue at the G8 summit earlier this year, and he will say he is “delighted” to announce the “central register of company beneficial ownership” will be publicly available.

    World leaders discussed tax avoidance and evasion at the G8 earlier this year

    He will also urge other world leaders to live up to commitments they made at the summit in Northern Ireland.

    Shadow treasury minister Shabana Mahmood welcomed the announcement of the public register but said the government must go “much further to tackle tax avoidance”.

    “With the amount of uncollected tax rising in the last year to £35bn, it’s clear this government is failing,” she said.

    She accused the government of failing to close tax loopholes and said it should be “doing more to open up tax havens”.

    There is a distinction between tax avoidance – legal measures to avoid paying tax – and illegal tax evasion.

    Getaway cars

    Roger Barker, of the Institute of Directors, also welcomed the move, saying it was “right that the true owners of companies should be transparent both to the company itself and the wider business community”.

    He added: “Significant practical challenges remain in order to ensure that any register of beneficial ownership is accurate and robust, but we support government efforts to begin this process”.

    Gavin Hayman, of anti-corruption campaigners Global Witness, said: “Anonymous shell companies are the global getaway cars for crime, corruption and tax evasion.

    “Full credit should go to the prime minister and the business secretary (Vince Cable) for acting to take away the keys.”

    And Chris Bain, director of aid charity Cafod, said: “It is both the right thing to do as it will support the global fight against money laundering and tax evasion, and also shows that the government has listened to public opinion.”

    He said the register would be “vital” for those fighting to prevent money intended for poverty eradication being “siphoned off”.

  • Cyprus damned on money laundering through leaked report

    Almost 60 percent of one of the bailed out Cypriot bank’s clients are “high risk” in terms of money laundering and almost a third of all bank depositors’ records contain errors, according to a leaked EU report.

    The report which was published by the Cypriot website stockwatch.com.cy – was drawn up in April by Moneyval, a unit of the Strasbourg-based Council of Europe, and by accountancy firm Deloitte on the request of eurozone finance ministers.

    The leaked four-page resume paints a damning picture of what goes on in the mini financial centre which just got €2 billion of EU taxpayers’ money. The full version, containing banks and customers’ names, is still firmly under lock and key.

    Deloitte looked at the six Cypriot banks which hold €2 billion or more in deposits. It then looked at 90 of the biggest big borrowers, worth €16 billion in total loans, 180 big depositors, worth €8 billion and a further 120 randomly selected customers.

    When analysing these customers, in terms of doing business with potential crooks, it found that 10 percent of all of them are “politically exposed persons” and that 58 percent of customers in one of the six banks pose a “high risk” on money laundering.

    It came to this conclusion by the information obtained from “simple commercial database checks” even though the banks themselves had failed to flag them.
    In terms of knowing who their customers really are, Deloitte said 27 percent of all depositors’ files and 11 percent of borrowers’ files “showed inaccurate information on the customer and beneficial owner.”

    It noted that banks rely on “introducers” or professional enablers, that is firms of lawyers and accountants who work for the real owners of accounts for 75 percent of their international business, muddying the water on customer identity.

    It added that when dealing with more “complex” structures – that is accounts held by firms with three or more layers of nominal owners between the bank and the real customer – the banks only did proper ID and KYC checks in just 9 percent of cases.

    These banks launched just four internal probes on potential money laundering on the sample clients between 2008 and 2012. They reported zero “suspicious transactions” to Cypriot authorities in 2008 to 2010, one in 2011 and “a few” in 2012.

    But Deloitte identified 29 potential cases of suspicious activity in the last 12 months alone, some of which it described as “very compelling cases.” “Deloitte’s analysis exposes systemic deficiencies in the implementation of preventive measures by the audited institutions,” the leaked report says.

    “Overall awareness regarding clients presenting higher risk profiles was not demonstrated to be robust,” it adds. The paper gives the lie to Cypriot diplomats and politicians who have been telling media in recent months the island adheres to international standards.

    It also casts doubt on the credibility of Moneyval, whose previous reports gave Cyprus a clean bill of health. “While Moneyval was not able to access actual customer files, its findings significantly revise its previous, more favourable assessment of Cyprus’ AML [anti-money-laundering] system,” the report notes.

    Moneyval, as an intergovernmental body, can only look at the work of Cypriot government institutions, which is one reason why the eurozone ministers brought in Deloitte.
    The man who chairs the ministers’ meetings, Dutch finance chief Jeroen Dijsselbloem, has said the EU will draft an “action plan” for Cyprus to enact if it wants to keep the bailout money flowing.

    German leader Angela Merkel in April also promised the Bundestag that she will clean up Cyprus if MPs approved the EU rescue. But the leaked paper risks making her look bad in the run-up to elections in September.  “It could be quite problematic for Merkel. If German people saw the report, they might say: ‘I would not give my money to such a country’,” an EU diplomat told the website.

  • 12.05.11 ICAEW Fine Accountant £5,000 for breach

    At a Disciplininary Council meeting a Mr P R Honeywell FCA was found to have failed to comply with Money Laundering Regulations2007 in that, following a practice assurance visit, he failed to:
    (i) document a client due diligence review; and
    (ii) identify clients for whom his firm, Honeywell (Monmouth) Limited, provides payroll services.

    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