Anti money laundering and financial crime background information and resources

HM Treasury consults on proposals for new anti-money laundering and counter-terrorist financing measures

Scottish solicitors are being encouraged to respond to two HM Treasury consultations on proposals to strengthen the UK's anti-money laundering and counter-terrorist finance (AML/CTF) regime.

The UK Government is consulting on draft Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.  The Money Laundering Regulations 2017 consultation closes on 12 April at 11.45pm.  The consultation and draft regulations can be found at www.gov.uk/government/consultations/money-laundering-regulations-2017

The new regulations aim to implement the requirements of the EU Fourth Money Laundering Directive and Financial Action Task Force Standards.  The have also been influenced by the findings of the National Risk Assessment 2015.  The draft regulations will impact on both firms and supervisors through the introduction of more prescriptive requirements about how supervisors carry out the AML/CTF regulation of their members.  The introduction of new or changed regulations will also have an impact, for example, through the requirement for firms to carry out a risk assessment.

Following the National Risk Assessment and an earlier consultation, the UK Government has decided to create a new body to oversee the work of UK AML supervisors, including the Law Society of Scotland.

We are responding 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 the Society.  The legislation establishing OPBAS is expected by the end of 2017.  The body should be operational by the start of 2018.

The consultation, which is available on the HM Treasury Website, closes on 26 April at 11.45pm.

We are encouraging our members to respond to both consultations to ensure that their views are considered.  We will publish our responses once submitted.  If you have any queries, please contact fincomp@lawscot.org.uk.

 

AML Practical Guides

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

The AML Good Practice Guide 2016 has information relating to:

  • The Role of the LSS & The Role of Scottish Solicitors
  • AML Legislative Framework
  • Relevant Persons & Regulated Business
  • MLRO/Nominated Officer Responsibilities
  • AML Polices & Procedures - Structure & Content
  • A Risk Based Approach & Risk Factors
  • Due Diligence Levels & Measures
  • AML Training & Record Keeping Requirements
  • SARs, Consent & Tipping Off

The Developing AML Policies & Procedures presentation has some further, more in-depth information for member firms 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 Firms)

Following feedback from our members, please find attached example AML Policy and Risk Assessment templates available for use by firms, in the related downloads section.

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 the Society believes "good looks like".
  • Firms must evaluate their own circumstances/business, review the forms and adapt/amend accordingly.
  • If firms choose to use these documents in an amended form, they should be able to demonstrate to the Society why any adaptions/amendments have been made.

AML ID&V - Information for Clients

Firms may find this Information sheet useful when explaining the legal requirement to undertake identification verification of clients and (in some situations) 3rd parties involved in a particular transaction.   Firms are welcome to download this information and pass to clients if this may prove useful.

 

The following information sheet may be useful to firms when explaining the legal requirement to undertake identification and verification of clients.

Money Laundering & Financial Crime Threats & Issues: Specific Country/Jurisdiction Information for Risk-Assessment Purposes

www.knowyourcountry.com 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 & Terrorist Financing Vulnerabilities of legal professionals AML Topics and Issues.

  • The Financial Action Task Force (on Money Laundering) (FATF) is an intergovernmental organization 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 & terrorist financing risks have impacted on legal professionals worldwide and how these risks can be managed. 

Read the FATF report

National risk assessment of money laundering and terrorist financing

  • The UK Government has completed the UKs first money laundering and terrorist financing national risk assessment which aims to identify, understand and assess the money laundering and terrorist financing risks facing the UK.
  • Legal services in the UK are considered from paragraph 6.64 to 6.97.  The principal money laundering and terrorist financing risks facing the legal sector are noted at paragraph 6.96.

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/468210/UK_NRA_October_2015_final_web.pdf

 

The National Crime Agency (NCA) - Guidance on Submitting Better Quality Suspicious Activity Reports (SARs) - Sept 2016

Please find extremely useful guidance from the NCA for all MLRO's submitting Suspicious Activity Reports (SARs).  The guidance covers how to submit a SAR, requesting and obtaining a defence against ML or TF charges (consent regime) through to the required content and structure of a SAR.  The document also contains examples and tips regarding good practice, along with further more general guidance and contact details.

We would advise all member firm MLRO's to review, and where necessary, revise processes and procedures to reflect this guidance.

 

Specific ID&V 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 driving 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)

BT

Virgin Media

British Gas

EDF Energy

EON Energy

NPower

Scottish Power

Government Agencies

Passport Office Basic Passport Checks

Passport Office - New Passport Design

DVLA Information on Driving Licenses

 

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

http://www.edisontd.net/ 

 

“A Lawyers Guide to Detecting & Preventing Money Laundering”.

A new guide aiming to provide lawyers across the world with practical guidance in detecting and preventing money laundering has been produced by the International Bar Association (IBA) in conjunction with the American Bar Association (ABA) and the Council of Bars and Law Societies of Europe (CCBE).  

Read the guide

 

Money laundering subscription email service

HM Treasury's Financial Crime Team provides a money laundering subscription email service that will be of interest to all firms of solicitors. 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 the Law Society of Scotland have been asked to highlight this service to our member firms. View instructions for subscribing to this service.

 

Our AML Contacts

  • For confidential telephone-based guidance on operational AML/financial crime-related queries occurring in the course of your day-to-day business as a solicitor, please call the Society’s Professional Practice team on Tel: 0131 226 8896
  • For in-depth guidance regarding strategic AML/financial crime issues (for example FATF/HMT/NCA-related queries, AML trends, sanctions-related advice) or guidance relating to AML policies, procedures, systems or training, please call Graham MacKenzie, AML Auditor on Tel: 0131 476 8176