Tag: HMRC & Supervisory Issues

  • 12 March 2009 SOCA ‘Payback’ Conference a success

    The payback conference at the National Motorbike Museum, Birmingham was well attended and was generally appreciated by all attendees. Most sectors had a presence of their supervisory bodies. HMRC gave a presentation on risk assessment as well as having advisors on hand to answer queries.

    The Office of Fair Trading (OFT) was on hand for the estate agency market while representatives from the Solicitors Regulatory Authority (SRA) and The Law Society were on hand for the legal market. The Accountancy sector was represented by a number of supervisors such as the ACCA, ICB & CIPFA. For the first time there were also displays from a number of firms who had support services for the regulated firm. There was a large number representing electronic verification services.

    There were a number of excellent ‘breakout’ sessions giving a good insight into law enforcement as well as supervisors stating their own purpose and problems. The highlight of the day had to be the new head of the SRA who stated that he had a number of problems in his sector to address, for example, who files a SAR on a transaction emanating from a solicitors client’s account? Answer, no one. When questioned directly regarding his concerns over solicitors acting in a criminal or improper manner, he replied, “I do not believe that solicitors are any worse than any other sector”. This did cause a titter amongst the audience.

    These events are worth attending especially for the smaller business, giving you a chance to network and discuss concerns with your peers, supervisors and law enforcement.

    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.

  • 12/02/2009 14,000 tax avoidance schemes and counting…

    At the last count, since rules requiring the disclosure of tax avoidance arrangements to HMRC were introduced in 2004 there had been around 14,000 such schemes.

    Or so we thought. Now it seems these might be far from the limit of the problem, as many “promoters” of schemes, such as accountants, lawyers and specialist “boutique” tax avoidance firms, are refusing to play the game.

    A parliamentary answer obtained by Austin Mitchell MP, who has also tabled an early-day motion urging action on tax avoidance, reveals that no fewer than 90 promoters are under investigation for failing to disclose schemes. Presumably they were either hoping they wouldn’t be picked up or think they have found a loophole in the rules.

    As promoters tend not to limit themselves to the odd scheme or two, the number of undeclared wheezes could be significant, especially if some of the bigger promoters think they have successfully found ways around disclosure. And that’s without considering any that are still beavering away unnoticed.

    Ninety promoters not disclosing schemes is alarming, even with the reassurance that HMRC is onto them. At the very least it shows that, valuable as disclosure rules are, they are no guarantee of authorities getting on top of tax avoidance.

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

  • 04/02/09 Birmingham Anti-Money Laundering Conference

    Businesses in the Birmingham area are invited to a FREE one day conference to learn how to safeguard themselves against serious organised crime and money laundering.

    The event, run by ‘Payback’ and hosted by the UK Financial Intelligence Unit of SOCA, will be held on Thursday March 12 at the National Motorcycle Museum, Birmingham and is aimed at small and medium sized businesses that are covered by the Money Laundering Regulations.

    Such businesses – by their very nature – are vulnerable to abuse by those attempting to launder the proceeds of crime, and the aim of the conference is to make businesses more aware of their role in identifying any suspicious activity taking place during their day-to-day work, thereby making a difference in reducing harm caused to communities by serious organised crime and also protecting their business.

    The programme of event is specifically designed to reflect the needs of those within an organisation that have a working interest in combating money laundering, to ensure their business is compliant, to share ideas and help mitigate against the possibility of criminals using businesses to launder the proceeds of crime.

    The day will run from 9.30am ton 4.30pm and anyone interested should contact fiudialogue@soca.x.gsi.gov.uk for an application form. It is a first come, first served basis.

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

  • 03/02/09 Important information for Money Service Businesses (MSBs)

    This note is to alert all Money Service Businesses (MSBs) to HM Treasury’s new powers to issue directions under the Counter Terrorism Act which came into force on 26 November 2008.

    What powers does HM Treasury have?

    HM Treasury (HMT) may give a direction if one or more of the following apply:

    • The Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities
    • HMT reasonably believe that there is a risk of terrorist financing or money laundering activities and that this poses a significant risk to the national interests of the UK
    • HMT reasonably believe that a country is involved in developing nuclear, radiological, biological or chemical weapons and that this poses a significant risk to the national interests of the UK

    What does this mean for MSBs?

    HMT could issue directions to all MSBs, or to some types of MSBs or to a particular business. This means that you must be ready to deal with these directions by training your staff and including how to deal with them in your anti money laundering systems.

    How will I know a direction has been issued?

    MSBs should sign up to Treasury’s email alert system at HM Treasury AML/CTF mailing list

    What will I have to do?

    Specific guidance will be issued with each direction and you will need to read the conditions imposed very carefully to find out what you need to do.
    You will have to identify the customers or transactions that are affected and may need to carry out more detailed checks on them.

    You may need to do one or more of the following:
    • Carry out enhanced customer due diligence (see MLR 8 para. 7.12 (PDF 653K)). You would normally do this in high risk situations such as when the customer is a politically exposed person.
    • Carry out ongoing monitoring of customers in a business relationship (see MLR 8 Part 9 (PDF 653K)). This is the kind of monitoring you would normally do in high risk situations.
    • Report all transaction with these people and organisations. You may need to do this weekly.
    • Cease business with certain people and organisations.

    What if I have to cease business with certain people and organisations?

    If this happens your customer or you can apply for a license to exempt them from this. HMT will provide further information on how to apply for licenses when they issue a direction.

    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.

  • FSA fines firm and MLRO for money laundering controls failings

    FSA fines firm and MLRO for money laundering controls failings

    The Financial Services Authority (FSA) has today fined Sindicatum Holdings Limited (SHL) £49,000 and its money laundering reporting officer (MLRO), Michael Wheelhouse, £17,500 for not having adequate anti-money laundering systems and controls in place for verifying and recording clients’ identities. This is the first time the FSA has fined a money laundering reporting officer.

    The FSA found a number of failings including:
    • the firm failed to implement adequate procedures for verifying the identity of its clients;
    • it failed to verify adequately the identity of a significant number of its clients;
    • it failed to keep adequate records with regard to the verification of the identity of its clients; and
    • Mr Wheelhouse failed to take reasonable steps to implement adequate procedures for controlling money laundering risk.

    William Amos, head of retail enforcement at the FSA, said:
    “It is vital to the integrity of the UK’s financial markets that regulated firms are not used by criminals to launder money. Senior management must implement and follow procedures that meet our requirements so that the risks their firms face are properly managed.”

    “This fine is a warning to firms and individuals about the importance of complying with our rules in this area and we will not hesitate to clamp down on failures, where necessary.”

    In deciding the penalty for SHL, the FSA took into account the limited financial resources of the firm and its ability to pay the fine. Had it not been for these factors the penalty would have been significantly larger.

    SHL and Mr Wheelhouse have taken robust steps to review and improve the firm’s systems and controls in relation to financial crime.

    The FSA did not find any evidence of money laundering at the firm.

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