Anti-Money Laundering Guidance
The Money Laundering Regulations 2007 came into force on 15th December 2007 (SI 2007 / 2157). The Money Laundering Regulations 2003 (SI 2003/3075) are revoked.
What are the changes in the Regulations?
The Treasury has issued an Information Sheet for firms, which includes the following section:
In Summary the new Regulations
• provide more detailed obligations regarding customer due diligence, for example, explicit requirements for firms to undertake ongoing monitoring of business relationships and for firms to identify not just the customer but the beneficial owner of the customer;
• require firms to vary customer due diligence and monitoring according to the risk of money laundering or terrorist financing;
• require firms to take enhanced customer due diligence measures in higher risk situations, while allowing firms to take reduced identification measures for specific situations with a lower risk of money laundering;
• allow firms to rely on certain other firms for undertaking customer identification; and
• clarify the arrangements for the supervision of firms, including those that will be supervised for the first time.
The guidance previously provided by the Society is altered in detail and in terms of the risk based and proportionate approach, however, the basic requirements remain:
Verify the identity of the client via reliable documentation to satisfy yourself that the client is who they claim to be.
Verify the identity of anyone else who appears to be either the underlying client or involved in the transaction – often parties providing funds towards a transaction, directors of a company etc. The new requirements are extended to some extent with a definition of beneficial owner, but it has always been necessary to “look behind a transaction” to determine who the client is.
Know your client’s business – if you don’t know what’s normal, how do you recognise what is unusual or what may give rise to a reportable suspicion
Monitor the transaction, in relation to what you know and expect of the client and also issues such as the source of funds, a change of funding arrangements at the last minute or withdrawing from a transaction for no obvious reason and requesting repayment of funds.
Don’t act until you are satisfied as to verification of identity
If you cannot satisfy yourself regarding identity do not act at all
Make a disclosure to SOCA if you have a suspicion of money laundering
Don’t tip off clients
Keep full, detailed records – If it isn’t written down, it didn’t happen
Ensure staff are trained and understand what is required of them
Appoint a MLRO
Firms with good anti money laundering procedures will have to be familiar with the requirements of the 2007 Regulations and will have to review the current systems and procedures and revise them to ensure they meet the requirements of the new Regulations but much of what is in place already will be easily transferable to the “new regime”.
