Tag: Money Laundering Regulations

  • Assets Recovery Agency Merges into SOCA

    The Serious Crime Act 2007 extends the Civil Recovery and Taxation powers of the Assets Recovery Agency to SOCA and, also, the Civil Recovery powers to the major prosecuting bodies. This is a significant step towards mainstreaming the powers across law enforcement agencies. The Act also provided for the merger of ARA and SOCA, with the effect that from 1st April 2008, SOCA will undertake civil recovery and tax investigations in England and Wales and Northern Ireland.

    Those cases that are currently the responsibility of ARA will be transferred to SOCA and the current casework will continue to be supported. Whilst other agencies are developing their civil recovery capabilities, SOCA will continue to provide support to law enforcement agencies by taking on cases referred to it, where the use of civil recovery and tax powers would be in the public interest.

    What Remains the Same?

    Where a law enforcement agency or prosecution authority has a criminal case after 1st April, which it has been unable to prosecute successfully; it will be able to refer it to SOCA to consider adopting it for civil recovery and/or assessing for tax. It must meet the following criteria:
    • Recoverable property must have been identified and have an estimated value of at least £10,000
    • Recoverable property must include property other than cash or negotiable instruments (although cash is recoverable if it is in addition to other property)
    • There must be evidence of criminal conduct that is supported to the civil standard of proof, i.e. on the balance of probabilities.

    Civil Recovery and Taxation (through the Proceeds of Crime Act) in Northern Ireland will be undertaken by SOCA. SOCA will retain the capacity to provide support to partners in Northern Ireland to support the ministerial assurances that there will be no reduction in the resource available for asset recovery in Northern Ireland. In Scotland, Civil Recovery powers will still be exercised by the Civil Recovery Unit of the Crown Office.

    The Confidential Hotline for Civil Recovery and Tax in Northern Ireland is 028 0931 5039.

    ARA’s power to issue tax assessments where the income can be linked to criminality will also transfer to SOCA. This means that SOCA and HM Revenue and Customs will be able to co-ordinate their efforts to recover criminal profits and bring criminals within the tax system.

    SOCA will also maintain the Joint Asset Recovery Database (JARD) which records asset recovery information for all law enforcement activity across the UK and provide support to financial investigators on using the service.

    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

  • Q. I am just starting out in business in the regulated sector, what should I do?

    Your first requirement before commencing work is to be registered for compliance supervision with an appropriate supervisor.

    To commence in business without the appropriate registration means you are committing a criminal offence. The penalty for this is up to a maximum of £5,000 if the breach was a failure to take reasonable steps. However this can be increased if the breach was deliberate.

  • Q. What is my supervisor looking for me to do?

    In simple terms there are four main things which all firms must do and be able to demonstrate compliance to a Supervisor, they are:-

    1. Your firm must adopt appropriate policies and procedures for compliance for which the MLRO must implement into the systems of the firm.
    2. Ensure that all staff have adequate training on understanding their roles and responsibilities under the UK’s AML regime, the offences for ML and procedures including client due diligence and reporting.
    3. Conduct client due diligence (CDD) procedures on all clients no matter how long they have been clients, including those pre 1 March 2004 clients at an appropriate time, including risk assessment, identity and verification and ongoing monitoring. 
    4. Implement a reporting regime for the reporting of Suspicious Activity Reports (SAR’s) to the Serious Organised Crime Agency (SOCA).  

    You must ensure that all these policies & procedures, evidence of identity and account opening procedures, internal & external reports and any other AML procedural matters are documented correctly and records kept for a minimum of 5 years.

  • Q. I am an estate agent who is my supervisor?

    The Office of Fair Trading (OFT) is the supervisory authority for estate agents who fall under S1 of the Estate Agents Act 1979. Enforcement and monitoring visits will be conducted by officers of TSS locally.

  • Q. I am an accountancy service provider, who is my supervisor?

    HM Treasury approved Professional Bodies for supervisory purposes are;

    1. Association of Chartered Certified Accountants
    2. Institute of Chartered Accountants in England and Wales
    3. Institute of Chartered Accountants in Scotland
    4. Institute of Chartered Accountants of Ireland
    5. Association of Accounting Technicians
    6. Association of International Accountants
    7. Association of Taxation Technicians
    8. Chartered Institute of Management accountants
    9. Chartered Institute of Public Finance Accountants
    10.Chartered Institute of Taxation
    11.Insolvency Practitioners Association
    12.Institute of Certified Bookkeepers
    13.Institute of Financial Accountants
    14.International Association of Bookkeepers

    Members of the above professional bodies will be supervised for complaince under their relevant professional assurance scheme and subject to the relevant members disiplininary codes of prectice.

    All other firms undertaking relevant activity by the way of business in the accountancy sector will register with HMRC for supervison

  • Q. What is the Proceeds of Crime Act 2002?

    POCA is the UK’s primary money laundering legislation. 

    Chapter 7 sets aout the predicate offences of money laundering applicable to all, S327 Conceals, S328 Arrangement and S329 and Aquires.

    Chapter 7 is also the area that concerns the professional in the regulated sector. It places a responsability on all employees in the regulated sector to report suspicious activity when they have “reasonable grounds to suspect” that money laundering is taking place. The responsability for compliance is placed upon the individual, not a firm. S330 is the offence of failing to report. 

    There is no de-minimus limit on the perceived value of the crime to be reported. A £10 proceed is to be treated the same as a £10,000 proceeed. Tax evasion is given no special status as a crime and is to be treated the same as any other type of crime.

  • Q. What are the Money Laundering Regulations?

    The ML Regulations are the UK’s secondary legislation in the AML/CFT regime. they where first introduced in 1993 and the 2007 Regulations are just the latest version.

    The 2003 Regulations, effective 1 March 2004 bough the professional such as the accountant, estate agent or solicitor into the regulated sector. The Regulations are activity based so therefore does not discriminate between the qualified or the unqualified.

    The Regulations are for firms to adopt policies and procedures to reduce the risk of money laundering taking place within their business. They are to help the individual fulfil their obligation to report suspicious activity under POCA.

    The 2007 gives rise to compulsory registation and supervision for compliance for all firms in the regulated sector regardless of membership of professional associations.

    The 2007 regulations also give rise to the “risk based” approach under which firms assess their risks according to a number of criteria and operate their polices and procedures according to that risk assessed and then demonstarte that to their supervisor.