Assessing international and domestic risks

Under regulation 17 of the Money Laundering, Terrorist Financing and Transfer of Funds (information on the payer) Regulations 2017, we (as an AML supervisor) must identify and assess the international and domestic risks of money laundering to which our members are subject.

In carrying out such a risk assessment we have taken into account various reports and guidelines issued by authorities such as the European Supervisory Authorities, HM Treasury and Home Office.

This risk assessment utilises the above reports (where available) and other relevant material to arrive at an assessment of the money laundering risks faced by Scottish solicitors analysed according to factors such as practice unit size and services offered by them.

We have also been able to take into account input to the ongoing Home Office and HM Treasury exercise to update the NRA in 2017. Thirty six Scottish solicitors from a broad range of practice units completed the NRA 2017 questionnaire.  

It is hoped that this document will be updated in November 2017 to review the impact of individual practice unit risk assessment information gathered to that point.

OPBAS Consultation

We have responded to a UK government call for information on the powers and mandate for the new supervisory body.

The Office for Professional Body AML Supervision (OPBAS), which will be responsible for working with all supervisors to ensure consistently high standards of AML supervision.

The new supervisory body is to be housed in the Financial Conduct Authority and is set to be funded through a new fee on 23 professional body AML supervisors, including us. The legislation establishing OPBAS is expected by the of 2017. The body should be operational by the start of 2018.

AML practical guides

These presentational guides have been developed by us in order to give further help and assist member firms regarding compliance with their AML duties, responsibilities and obligations.

The AML good practice guide 2017 has information relating to:

  • The role of the LSS and the role of Scottish solicitors
  • AML legislative framework
  • Relevant persons and regulated business
  • Money laundering reporting officer and nominated officer responsibilities
  • AML policies and procedures - structure and content
  • A risk based approach and risk factors
  • Due diligence levels and measures
  • AML training and record keeping requirements
  • SARs, consent and tipping off

The AML - developing policies and procedures 2017 presentation has some further, more in-depth information for member practice units regarding good practice in this area, including style format and content of these important documents.  

Example AML policy and risk assessment templates (for use by practice units)

Following feedback from our members please see our AML policy and risk assessment templates available for use by practice units. 

Essential considerations when using these templates:

  • These forms are not a definitive representation of compliance in this area and may not be relied upon as such - rather it represents what we believe "good looks like".
  • Practice units must evaluate their own circumstances and business, review the forms and adapt or amend accordingly.
  • If practice units choose to use these documents in an amended form, they should be able to demonstrate to us why any adaptations or amendments have been made.
Money laundering and financial crime threats and issues

Specific country and jurisdiction information for risk-assessment purposes.

Know your country is a useful tool in determining the money laundering issues and threats associated with an individual country or jurisdiction - which can then be used to factor into your risk assessment of a potential client or transaction involving that country.

Another extremely useful resource is the financial action task force (FATF) report: money laundering and terrorist financing vulnerabilities of legal professionals AML topics and issues.

  • The financial action task force (on money laundering) (FATF) is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering and terrorism financing.
  • The FATF's primary policies issued are the forty recommendations on money laundering from 1990 and the 9 special recommendations (SR) on terrorism financing (TF)   
  • Together, the forty recommendation and special recommendations on terrorism financing set the international standard for anti-money laundering measures and combating the financing of terrorism and terrorist acts.  They set out the principles for action and allow countries a measure of flexibility in implementing these principles according to their particular circumstances and constitutional frameworks.
  • Both sets of FATF recommendations are implemented at the national level through legislation and other legally binding measures.
  • It monitors countries' progress in implementing the FATF recommendations by 'peer reviews' ('mutual evaluations') of member countries. 

This report provides extensive examples of "red flags" cases of how money laundering and terrorist financing risks have impacted on legal professionals worldwide and how these risks can be managed.

Read the FATF report

Specific identification and verification guidance

How might you or your colleagues spot fake ID documents at client take-on stage?

One way would be to compare and contrast documentation presented against those you know are definitely genuine.  This may be using your own photo-card licence or passport to compare against, or helpfully - the passport office, the DVLA and utility bill providers all provide information on security features, formats and layouts of their bills or issued documents on their websites.

You can find examples and useful links below:

Main energy providers (for utility bill examples - other utility providers may have similar)

Government agencies

For sample images of genuine UK and international travel and identity documents organisations can also refer to:

http://www.edisontd.net/ 

 

AML subscription email service

HM treasury's financial crime team provides a money laundering subscription email service that may be of interest to practice units. The purpose of the service is to allow the treasury to communicate directly with subscribers when there are important anti-money laundering developments.

Regulators such as us have been asked to highlight this service to our member practice units.