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Money Laundering Reporting

Officer Groups

Winter 2016

accuity.com

Accuity 14th November 2016

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Will Davies

// Key Account Manager

Will.Davies@accuity.com

+44 (0) 207 6533 827

Money Laundering Reporting

Officer Groups

Winter 2016

Objectives

• To provide an update on AML developments

• To share good practice between firms

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Contents

• Policy Update

• Regulatory Update

• SRA AML Thematic Review findings

• NCA developments

• Making good SARs

Policy Update

• Fourth Directive Update

– Begun transposition

– In consultation phase

– Draft regulations in New Year

– Implementation June 2017

Policy Update

• Main 4MLD issues

– Risk Assessments

– Domestic PEPs – Consider Section 30 BoE and

FS Act 2016

– Trust registers

– Data Protection

– Pooled client account

– Supra-National Risk Assessment

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Policy Update

• EU Supra-National Risk Assessment (SNRA)

– Methodology

– Legal Advice

– References to witting participation

– Mitigating Risks

– Privilege

– STR (SAR) numbers

Policy Update

• Amending EU Directive to 4MLD

– Increased FIU powers

– Beneficial ownership threshold

– Trust registers

Policy Update

• AML Action Plan Legislative Review

– Information Sharing

– Increased Asset Forfeiture Powers

– Designation of entities

– Illicit enrichment offence

– Unexplained Wealth Orders

– Consent

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Policy Update

• AML Action Plan – Consent Response

– Far-reaching regime requires protection

– Criminalising normal business activity

– Requires an equivalent replacement

– Policy objective or saving costs?

Policy Update • AML Action Plan – Supervisory Regime

– Guidance by professionals for professionals

– HMT continues to approve professional

guidance

– Legal safe-harbour continues

– ‘Professional Enablers’ rhetoric is regrettable

– NCA must share intelligence better

– HMT needs adequate resources to carry out

it’s monitoring role

Policy Update • Criminal Finances Bill

– Consent regime retained

– Moratorium period

– Disclosure Orders

– Forfeiture powers

– Unexplained Wealth Orders

– Corporate offence to ‘facilitate tax evasion’

– Information sharing gateways

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• SRA thematic review

– Report published in May 2016

– Visited 300 firms

– Types of firms seen

– Positive findings

Regulatory Update

Regulatory Update

• SRA thematic review findings:

• Concerns around effective MLROs

– Experience

– Training

– Authority

• Job description

– Support from the Law Society

• What would help?

Regulatory Update

• SRA thematic review findings:

• Policies

– Review them

– Do they reflect your risk assessment

– Have you audited against them

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Regulatory Update

• SRA thematic review findings:

• Staff training

– How often?

– How many reports are you getting?

– Try a quiz to test knowledge

Regulatory Update

1. What is the maximum penalty for a money laundering

offence?

2. What is Money Laundering?

3. What crimes are caught by the money laundering

legislation?

4. Are you regulated?

5. Who is your Money Laundering Reporting Officer?

6. Why do we get evidence of a client’s address?

7. What is tipping off?

Regulatory Update

• Staff training (continued)

– What are you training on?

– Who is delivering the training?

– How do you know if the training is effective?

– Law Society Support

• What would you like?

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Developments from UKFIU

• Legal Sector Engagement Group

• Working on typolgies which can be shared

with the sector

• Continued pressure on the NCA

– Challenging IT

– Lack of resources

Quality of SARs

• Regulated sector under criticism from

NCA regarding the quality

• Concerned that the use of Consent can

encourage Money Laundering

• Documents can be found at

• www.nationalcrimeagency.gov.uk/about-

us/what-we-do/economic-crime/ukfiu

New Glossary Codes

• 1st September 2016

• Guidance Booklet

• Use of codes improves information

sharing

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Making good SARs

• Findings from the NCA

• Rejecting SARs

• Guidelines for drafting SARs on AML page

– http://www.lawsociety.org.uk/support-

services/advice/articles/nca-consent-

request-guidelines/

• Options if rejected?

Quality of SARs

• No identifying features

• No occupation/employer

• No reasons for suspicion

• No details of secondary individuals associated with the

transaction

• Incomplete reasons for suspicion

• Consent box not ticked on report form

• Fax front sheet or 'reasons for suspicion' has no mention

of consent

• No information as to why consent required

Quality of SARs

• Guidance on submitting better quality SARs

• Important so they can see

– Who is doing what

– Who they are/were doing it with

– When they are/were doing it

– Why they are/were doing it

– Where they did it

– How they are doing it

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Completing a SAR

1. Clear and Concise • Structure your report in a logical format including all relevant

information.

• Briefly summarise your suspicion.

• Provide a chronological sequence of events.

• Keep the content clear, concise and simple.

• Avoid acronyms and jargon.

• Do not write the SAR in capital letters – this makes it hard to read.

• If including a large amount of information/text, break it up into more.

• Manageable – and readable – paragraphs.

• Very long SARs which are text heavy are difficult to digest.

• Use punctuation.

• Separate bank account/transaction information.

Completing a SAR

2. Reason for suspicion • Who is involved?

• How are they involved?

• What is the criminal/terrorist property.

• What is the value of the criminal/terrorist property.

• Where is the criminal/terrorist property?

• When did the circumstances arise?

• When are the circumstances planned to happen?

• How did the circumstances arise?

• Why you are suspicious or have knowledge.

Completing a SAR

3. Give as much info as possible (having

regard to privilege)

– Associated subjects

– Dates of Birth, Post Codes, Occupations

– Financial transactions

4. No attachments

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Completing a SAR

• Consent

– Now referred to by NCA as a ‘Defence against

Money Laundering’ (DAML)

– Two documents refer

• Changes to the ‘Consent’ Approach; Requesting A

Defence Under POCA & TACT from 18th July 2016

• Requesting a defence from the NCA under POCA

and TACT

– Email help only

Deemed Consent

• 7 working days

• Used where the NCA are not happy to

grant consent

• Consider withdrawing from acting

Completing a SAR

• NCA are closing Consent SARs when they are missing:

a) The information or other matter which gives the basis

for the reporter’s knowledge or suspicion

b) A description of the property that the reporter knows,

suspects or believes is criminal property

c) A description of the prohibited act that the reporter

wants a DAML to carry out

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Completing a SAR

• In the case of a report in the regulated sector:

d) The identity of the person(s) the reporter knows or

suspects is involved in money laundering*

e) The whereabouts of the property that the reporter

knows or suspects is criminal property*

f) If (d) and/or (e) are missing, any information the

reporter has which they believe or it is reasonable to

expect them to believe may assist in identifying (d)

and/or (e).

Completing a SAR

• To avoid a SAR being closed :

– All requests should explicitly state what activity the

reporter is carrying out, and for which the NCA is

being asked to provide the reporter with a defence

to the money laundering offence for that specified

future activity.

– Best practice is to avoid using terms such as “we

wish consent to proceed” or “we wish consent to act

for our clients”.

Completing a SAR • Be specific about the work you are undertaking for your

customer/client which you believe you will require a

defence to money laundering for e.g.:

• - “to buy/sell the property at (address) for (value amount)”

• - “to disburse the funds between the following people …”

• - “to buy/sell the (named company)”

• - “to draw up contracts between party X and party Y,

transfer the ownership of the (named company) to party Y,

and transfer the (value of funds) to party X which is all part

of the arrangement”

• - “to release the funds in account A to person B”.

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Completing a SAR

• If you do not have the information

sought by the NCA?

–Explain why

–Don’t assume the NCA know how

we work

Law Society AML support

• Practice Notes

• AML Helpline – 020 7320 9544

• AML e-update (PC fee inclusive)

• Training workshops (February to April 2017)

• AML Toolkit

• Law Society - Risk and Compliance Service

www.lawsociety.org.uk/aml

Questions

• This is the opportunity to share good

practice and discuss recent issues

• We do need to hear from you

– To inform our lobbying and

– To provide you with the right support