Financial crime

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It is important to note that there is further anti-money laundering legislation applies to firms outside the sectors covered by the Money Laundering Regulations.

Financial Conduct Authori...

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Trust & Company Services: Providers of trust and company services (TCSPs)

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• The appointment of a Senior Manager responsible for compliance with anti-money laundering legislation: the Money Laundering Compliance Principal (MLCP)

• A further appointment (that could be the same person) of a Money Laundering Reporting Officer (MLRO)

• The vetting of staff to reduce the risk of the business being used for money laundering

• Staff must be trained in anti-money laundering procedures and the law

• There must be an internal reporting procedure whereby staff can report their suspicions

• Firms must conduct internal audits

• The responsible senior manager should ensure regular reporting to senior management on money laundering compliance — typically at least annually as good practice

• A requirement for customer due diligence (CDD): confirming that the customer is who they say they are (checking their identity) and that their motivation in transacting business is genuine

- CDD checks must be performed in respect of all new customers before business is conducted

- Records of CDD must be kept for at least five years after the end of the relationship with the customer or from the date of a particular transaction

- CDD must be carried out again if the customer changes name or address

- CDD must also be carried out again if there has been no customer contact for 12 months or more

• Scope to carry out simplified due diligence (SDD), where the risk of money laundering is deemed to be low, or enhanced due diligence (EDD) in specified higher-risk situations

MLCP

This is the senior manager ultim...

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Complicated, unusual or seemingly pointless transactions are requested

Firms that conduct good ‘Know Your Customer’ processes should be well aware of what would be normal and what might be a ‘red flag’ and this is potentially as good a defence against money laundering as anything as is confirming that the source of funds and wealth should make sense.

HMRC

A firm may be fined proportionately by HMRC for failing to comply with the Money Laundering Regulations.

Businesses supervised by HM Revenue & Customs (HMRC) are subject to requirements, the main ones are summarised below:

The fit and proper test

Part of the registration process for Money Service Businesses and Trust and Company Service Providers: it applies to particular individuals within these businesses. The decision as to whether an individual is fit and proper is in part based on the risk of money laundering or terrorist financing.

Registration

A registration will be cancelled where, after registration, the 'relevant person' is no longer able to meet the conditions for registration or where the relevant person has failed to provide HMRC with information it has requested by notice.

Relevant person

A relevant person is a person or business to whom the regulations apply. The definition includes those persons who HMRC believes or suspects to be a relevant person.

Penalties

A penalty can be imposed for failure to provide information required by notice.

Disclosure

A legal gateway exists between supervisory authorities that allows them to share information subject to certain conditions.

How do HMRC define a ‘relevant person’?

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