ANTI-MONEY
LAUNDERING & TERRORIST FINANCING POLICY
Index
Section
Contents
1
Introduction
2
Scope of the
Policy
3
What is Money
Laundering?
4
How to Report
Concerns
5
Responsibilities
6
Policy
Review
Appendix A
– Signs of Potential Money Laundering
Appendix B
– Guidance for officers undertaking Regulated
Activity
Appendix
C – Money Laundering Officer Disclosure
Process
Appendix D
– Suspicious Activity Reporting Form
1
Introduction
1.1
Money laundering is the process of
taking profits from crime and corruption and transforming them into
legitimate assets. It takes illegally obtained money and converts
it into other assets so they can be reintroduced into legitimate
commerce. This process conceals the true origin or ownership of the
funds, and so 'cleans' or ‘launders’ them. Money or
assets gained as a result of crime can ultimately be used to fund
terrorism.
1.2
The Council undertakes transactions and delivers services which can
fall under UK anti-money laundering legislation, which includes,
but is not limited to:
·
the Terrorism Act 2000
·
the Proceeds of Crime Act
2002
·
the Money Laundering, Terrorist
Financing, and Transfer of Funds (Information on Payer) Regulations
2017
·
the Criminal Finance Act
2017
·
the Money Laundering
Regulations.
1.3
Anti-money laundering legislation has been updated regularly by the
Government in recent years. While the legislation does not
specifically target local authorities, some types of council
activity can fall under the requirements of the law. It is
therefore important for councils to assess money laundering risks
and put sufficient controls in place to prevent their organisation
from being used for money laundering.
1.4
All employees should be aware of the threat of money laundering,
the need to report suspicions of money laundering, and the
consequences of not following the principles and processes set out
in this Policy. A list of key risk factors for employees to be
aware of is included in Appendix A.
1.5
The Council has a Money Laundering Reporting Officer (MLRO) who is
responsible for raising awareness of the issue within the Council
and reporting appropriate concerns to the National Crime Agency
(NCA) when they arise. The MLRO is [insert job title] and can be contacted
on [insert telephone]. If
the MLRO is unavailable the Council has a Deputy MLRO. The Deputy
MLRO is [insert job title]
and can be contacted on [insert
telephone].
1.6
Some types of work undertaken by the Council may fall under the
definition of regulated activity in the legislation (see paragraph
2.3). There are more specific detailed requirements for employees
working in these areas and guidance is set out in Appendix
B. The Council has a Chief Money Laundering Compliance Officer
(CMLCO) who has oversight of all Council anti-money laundering
arrangements and is specifically responsible for overseeing
regulated activity. The CMLCO is the Council’s [Monitoring Officer] and can be
contacted on [insert
telephone].
1.7
This Policy contains a form that should be submitted to the MLRO
when money laundering concerns arise (Appendix D). This form
may be used by any employee to report a suspected issue.
2
Scope of the Policy
2.1
This Policy applies to all employees of the Council. It aims to
maintain the high standards of conduct expected by the Council by
preventing criminal activity through money laundering.
2.2
To ensure the Council complies with its legal obligations, all
employees must be aware of the content of this Policy. Failure by
an employee to comply with the procedures set out in this Policy
may lead to disciplinary action being taken against them and could
constitute a criminal offence. Any disciplinary action will be
dealt with in accordance with the Council's [Disciplinary Policy and
Procedure].
2.3 Money laundering
legislation sets out some activities that are subject to specific
requirements. These are areas that are at greater risk of being
targeted by criminals for money laundering (for example certain
financial and legal services, and those dealing in property sales
and acquisitions). These areas, amongst others, are known as
regulated activities. Some work undertaken by the Council may fall
under the definition of regulated activity. This is generally in
higher risk areas, where the Council carries out work on behalf of
other organisations such as:
·
accounting and treasury management
services
·
legal and company related
work
·
property services
·
payroll services.
2.4 Employees undertaking work
that could be considered regulated activity need to be aware of the
more detailed requirements set out in Appendix B. If anyone
is unsure of whether their work falls into this category, further
advice can be sought from the CMLCO, the MLRO, or the Deputy
MLRO.
3
What is money laundering?
3.1
Money laundering is a general term for any method of disguising the
origin of assets obtained through crime. Assets including money and
property are described as “criminal property” in
legislation. Criminal property may be the proceeds of any criminal
activity including terrorism, drugs trafficking, corruption, tax
evasion and theft. The purpose of money laundering is to hide the
origin of the criminal property so that it appears to have come
from a legitimate source. Unfortunately, no organisation is safe
from the threat of money laundering, particularly where it is
receiving funds from sources where the identity of the payer is
unclear. There is therefore a real risk that the Council may be
targeted by criminals seeking to launder the proceeds of
crime.
3.2
It is possible that the proceeds of crime may be received from
individuals or organisations who do not know that the assets
involved originated from criminal activity. However, this could
still be an offence under the legislation. It is no defence for a
payer or recipient of funds to claim that they did not know that
they were committing an offence if they should have been aware of
the origin of assets. All employees dealing with the receipt of
money or having contact with third parties from whom money may be
received need to be aware of the possibility of money laundering
taking place. This includes a wide range of service areas. As an
example, an area where money laundering may need to be considered
includes cases where the Council takes possession of money
belonging to a customer, for safekeeping, under its statutory care
duties.
3.3
Money laundering offences
include:
·
concealing, disguising, converting,
transferring criminal property or removing it from the
UK;
·
entering into or becoming concerned
in an arrangement which you know or suspect facilitates the
acquisition, retention, use or control of criminal property by or
on behalf of another person;
·
acquiring, using or possessing
criminal property;
o
an attempt, conspiracy or incitement
to commit such an offence; or
o
aiding, abetting, counselling or
procuring such an offence
·
becoming concerned in an arrangement
facilitating concealment, removal from the jurisdiction, transfer
to nominees or any other retention or control of terrorist
property.
3.4
The broad definition of money laundering means that the legislation
applies to a very wide range of everyday activities within the
Council. This means that any employee (irrespective of what sort of
work they do at the Council) could encounter money laundering and
be required to report it.
3.5
Whilst the risk to the Council of contravening the legislation is
relatively low, it is important that all employees are familiar
with their responsibilities. Serious criminal sanctions may be
imposed for breaches of the legislation. Any person found
guilty of a money laundering offence is liable to imprisonment
(maximum sentence of 14 years), a fine or both. However, an offence
is not committed if any suspected money laundering activity is
reported to the Council’s MLRO and, where necessary, official
permission is obtained to continue with a transaction.
Potential signs of money laundering
3.6
It is impossible to give a definitive list of how to spot potential
money laundering or how to decide whether to make a report to the
MLRO. The following are examples of major risk factors which may,
either alone or cumulatively with other factors, suggest the
possibility of money laundering activity. A more exhaustive list is
contained in Appendix A.
General
factors
·
Payment of a
substantial sum in cash (over £10,000).
·
A
secretive client or customer: for example, they refuse to provide
requested information without a reasonable explanation, don’t
want to provide identification, or they supply unsatisfactory
identification.
·
Concerns about
the honesty, integrity, identity, or location of a client or
customer.
·
The
cancellation or reversal of an earlier transaction (where the
client or customer is likely to request the return of previously
deposited monies).
·
Any
other activity which by its nature is likely to be related to money
laundering, tax evasion, or terrorist financing.
Property
transactions
·
A
cash buyer.
·
Funds
received for deposits or prior to completion from an unexpected
source, or where instructions are given for settlement funds to be
paid to an unexpected destination.
·
No
clear explanation as to the source of funds along with a lack of
clarity as to how the client would be in a position to finance the
purchase.
3.7
Property transactions are a higher risk for the Council. Tenants
have the ability to purchase their council property under the Right
to Buy scheme and the Council may choose to sell land to a
developer or other third party. In any sale of property or land,
checks need to be made to establish the source of funding and
ensure that money laundering offences are not occurring. In
addition, if a buyer has no legal representation, then client
identification must be sought before business is conducted. If a
buyer has legal representation, then that representative is
responsible for undertaking the required identification.
3.8
Facts which tend to suggest that something odd is happening may be
sufficient for a reasonable suspicion of money laundering to arise.
Be on the look-out for anything out of the ordinary. If something
seems unusual, stop and question it. If anyone is unsure of any
transaction then further advice should be sought from the
MLRO.
4 How to
report concerns
4.1
Where
an employee knows or suspects that money laundering activity is
taking place (or has already) they must disclose this as soon as
possible to the MLRO.
4.2
The
disclosure should be made to the MLRO using the form attached in
Appendix D. The report must include as much detail as
possible. It should contain all available information to help the
MLRO decide whether there are reasonable grounds to show knowledge
or suspicion of money laundering. The MLRO will use this
information to prepare a report to the National Crime Agency (NCA)
if needed. Copies of any relevant supporting documentation should
be sent to the MLRO along with the form.
4.3
Once an issue has been reported to the MLRO employees must follow
any directions they may give. Employees must not make any further
enquiries into issues themselves. If an investigation is needed it
will be carried out by the NCA. All employees are required to
cooperate with the MLRO and the NCA (or other external authorities
such as the police) during any subsequent money laundering
investigation.
4.4
Employees must at no time and under no circumstances voice any
suspicions to people who they suspect of money laundering (or to
anyone other than a line manager (unless possibly implicated) or
the MLRO). Doing so could result in a criminal offence
(“tipping off”) being committed.
4.5
No references should be made on any Council files or systems that a
report has been made to the MLRO. If a client exercised their right
to see a file (for example through a subject access request under
data protection legislation) then a note could tip them off to a
report having been made. The MLRO will keep appropriate records in
a confidential manner.
4.6
The MLRO will advise the employee of the timescales in which they
will respond to the report. They may wish to discuss the report
with the employee and gather further information.
5
Responsibilities
5.1
The Council has a responsibility to prevent money laundering from
occurring within the organisation whether that be in the course of
day-to-day business or in work that is considered to be regulated
activity. It is the responsibility of every employee to be vigilant
and report any concerns of money laundering.
5.2
The Chief Money Laundering Compliance
Officer has overall responsibility for monitoring anti-money
laundering policy, regulations and procedures. The CMLCO will
appoint a MLRO and deputy MLRO. The CMLCO will ensure appropriate
procedures for regulated activity are in place and obtain approval
of the policy from the Audit Committee. The CMLCO will also ensure
that directorate departments undertaking regulated activity have
appropriate training and risk assessments in place.
5.3
The Money Laundering Reporting Officer (and deputy) have
responsibility for receiving reports of suspicions of money
laundering, considering those reports and, where appropriate,
submitting reports to the National Crime Agency (see Appendix
C). The MLRO will convey instructions from the NCA eg, to halt
or proceed with a transaction. They will also maintain records of
all reports on behalf of the Council.
5.4
The [Head of Internal Audit]
will ensure there is an independent audit function to evaluate and
make recommendations about the policies, controls, and compliance
in relation to anti-money laundering. [Veritau] will regularly promote
awareness of the Anti-Money Laundering Policy to all
employees.
6
Policy review
6.1
This Policy will be reviewed every three years or as soon as any
significant changes to anti-money laundering legislation,
regulations, or guidance occurs.
POLICY APPROVED
XX XX 2022
Appendix
A
Signs
of potential money laundering
It is
not possible to give a definitive list of ways in which to identify
money laundering or how to decide whether to make a report to the
Money Laundering Reporting Officer. However, the following are
types of risk factors which may, either alone or cumulatively,
suggest possible money laundering activity.
Concerns about
transactions
·
Payment of a
substantial sum in cash (over £10,000).
·
Complex or
unusually large transactions or systems.
·
The
source or destination of funds differs from the original details
given by the client.
·
Movement of funds
overseas, particularly to a higher risk country or a tax
haven.
·
Where, without
reasonable explanation, the size, nature and frequency of
transactions or instructions (or the size, location, or type of a
client) is out of line with normal expectations. For example, the
use of cash where other means of payment are normal.
·
Unusual patterns
of transactions which have no apparent economic, efficient, or
visible lawful purpose.
·
Transactions at
substantially above or below fair market rates.
Other activity of
concern
·
Transactions that
don’t seem logical from a third party’s perspective.
For example, receipt of unexpected funds, or unnecessary routing of
transactions through another party’s accounts.
·
Overpayments by a
client (or money given on account). Care needs to be taken,
especially with requests for refunds. For example, if a significant
overpayment is made which results in repayment being needed –
this should be properly investigated and authorised before
payment.
·
Helping to set up
trusts or company structures, which could be used to obscure
ownership of property.
·
The
cancellation or reversal of an earlier transaction (where the
client is likely to request the return of previously deposited
monies).
·
Requests for
release of client account details other than in the normal course
of business.
·
Companies and
trusts:
o
Bodies with a complicated ownership
structure, which could conceal underlying beneficiaries.
o
Extensive use of corporate
structures and trusts in circumstances where the client’s
needs are inconsistent with the use of such structures.
·
Any
other activity which by its nature is likely to be related to money
laundering, tax evasion, or terrorist financing.
Concerns about a
client
·
A
secretive client: for example, they refuse to provide requested
information without a reasonable explanation, don’t want to
provide identification, or they supply unsatisfactory
identification.
·
A
client you have not met.
·
Difficulties in
establishing the identity of the client.
·
Concerns about
the honesty, integrity, identity, or location of a client. For
example, a client who is not present in the area and where there is
no good reason why they would have dealings with the Council; or
information reveals that a client is linked with
criminality.
·
Involvement of an
unconnected third party without logical reason or
explanation.
·
Absence of an
obvious legitimate source of the funds.
·
Poor
business records or internal accounting controls.
·
Individuals or
companies that are insolvent yet have funds.
·
A
previous transaction for the same client which has been, or should
have been, reported to the MLRO.
Concerns about
property transactions
·
A
cash buyer.
·
Sudden change of
buyer.
·
The
client’s financial profile does not fit.
·
Unusual property
investment transactions if there is no apparent investment purpose
or rationale.
·
Instructions to
receive and pay out money where there is no linked substantive
property transaction involved (surrogate banking).
·
Funds
received for deposits or prior to completion from an unexpected
source, or where instructions are given for settlement funds to be
paid to an unexpected destination.
·
No
clear explanation as to the source of funds along with a lack of
clarity as to how the client would be in a position to finance the
purchase.
·
Money
comes from an unexpected source.
Appendix
B
Guidance for
officers undertaking Regulated Activity
1
Introduction
1.1
Money laundering legislation and guidance defines a number of
commercial activities that are subject to specific anti-money
laundering requirements. These are areas that are at greater risk
of being targeted by criminals for laundering money (for example
financial services, and those dealing in property sales and
acquisitions). These areas are known as regulated activities.
Further details on regulated activities are set out in paragraph
2.1 below.
1.2
It is clear from the money laundering regulations and guidance from
supervisory bodies, that councils and their in-house lawyers and
accountants are not intended to be caught within the definition of
regulated activities when carrying out normal council business. For
example, because they are not acting as external or independent
advisors for their council.
1.3
However, with the growth in external commercial work being
undertaken by councils in recent years, there are a growing number
of circumstances where lawyers, accountants and others working for
councils could be caught within the scope of the legislation. For
example, where employees undertake work for organisations other
than the Council under contract. Such external work may be classed
as being undertaken “by way of business” and could
bring those activities within the regulated sector. Guidance issued
by supervisory bodies states that where there is uncertainty over
the application of the regulations, the broadest possible approach
to compliance with the regulations should be undertaken.
2
Definition of regulated activity
2.1
Regulated activity is defined as:
·
material aid or assistance or advice in connection with the tax
affairs of another person by a practice or sole practitioner
(whether provided directly or through a third party);
·
the provision to other persons of accountancy services by a firm or
sole practitioner who by way of business provides such services to
other persons;
·
legal or notarial services involving the participation in financial
or real property transactions concerning:
o the
buying and selling of real property or business entities;
o the
managing of client money, securities, or other assets;
o the
opening or management of bank, savings, or securities accounts;
o the
organisation of contributions necessary for the creation,
operation, or management of companies;
o the
creation, operation or management of trusts, companies, or similar
structures;
by a firm or sole practitioner who by way of business provides
legal or notarial services to other persons (a person participates
in a transaction by assisting in the planning or execution of the
transaction or otherwise acting for a client in relation to
it);
·
forming companies or other legal persons;
·
acting, or arranging for another person to act:
o as a
director or secretary of a company;
o as a
partner of a partnership;
o in a
similar position in relation to other legal persons;
·
providing a registered office, business address, correspondence or
administrative address or other related services for a company,
partnership or any other legal person or arrangement;
·
acting, or arranging for another person to act, as:
o a trustee
of an express trust or similar legal arrangement;
o a nominee
shareholder for a person other than a company whose securities are
listed on a regulated market.
2.2 In general, the areas where
the Council is carrying out activities that may fall within the
definition of regulated activities relate to accounting services,
treasury management, payroll services and legal services in
relation to financial, company or property transactions. However,
this will only be the case if the work is carried out for external
clients. Work undertaken on behalf of Council services (including
traded services where there is no separate legal entity involved)
would not fall under the scope of regulated activity.
3
Responsibilities
3.1 All officers undertaking
regulated activity within the Council should be aware of the
potential to become involved in money laundering and terrorist
financing. Members of staff may be liable to criminal charges if
they fail to report their concerns. These criminal charges relate
to someone’s actions (or lack of them) where money laundering
activity is suspected. A criminal offence could be committed if an
employee:
·
knows or suspects (or has reasonable
grounds to do so) that another person is engaged in money
laundering;
·
can identify a money launderer or
the whereabouts of laundered property (or they believe, or it is
reasonable to expect them to believe, that information held would
assist in identifying a money launderer or the whereabouts of
laundered property); and
·
does not disclose information held
to the MLRO as soon as practicable.
3.2 As
set out in paragraph 1.7 of the Policy, the [Monitoring Officer] is the senior
officer within the Council responsible for ensuring compliance with
anti-money laundering requirements (the Chief Money Laundering
Compliance Officer – CMLCO). The CMLCO is responsible for
ensuring that the Council has appropriate policy, procedures, and
controls in place to manage money laundering risks.
3.2 In relation to regulated
activities, the CMLCO will:
·
ensure there are arrangements in place within the Council for
conducting money laundering and terrorist financing, and tax
evasion risk assessments;
·
establish appropriate systems, policies, controls and procedures to
address identified risks of money laundering – and ensure
that the arrangements have been approved by the relevant body or
bodies;
·
ensure arrangements are in place to screen relevant employees,
including an assessment of their skills, knowledge, and expertise
to carry out their functions effectively and of their conduct and
integrity;
·
support and facilitate independent internal audit of money
laundering arrangements;
·
ensure training on anti-money laundering is provided to relevant
employees.
4 Due
diligence
4.1 Where the Council is
carrying out regulated activities (see 2.1 above), and any of the
following apply, then customer due diligence measures must be
applied.
·
The Council forms a business relationship with a client (which is
expected to have an element of duration) – this includes the
formation of a company;
·
The Council undertakes an occasional transaction amounting to
15,000 Euros (approximately £13,000) or more whether carried
out in a single operation or several linked ones;
·
The Council suspects money laundering or terrorist financing;
·
The Council suspects tax evasion from the UK or a foreign
country;
·
The Council doubts the veracity or adequacy of information
previously obtained for the purposes of client identification or
verification.
4.2 Information on customer due
diligence procedures is set out in 4.5 below. If due diligence is
needed, it must reflect the corporate regulated activity AML risk
assessment, and the assessed level of risk in the individual case
– taking account of factors such as:
·
the purpose of an account, transaction, or business
relationship;
·
the level of assets to be deposited/size of the transactions
undertaken by the client;
·
the regularity and duration of the business relationship.
4.3 The customer due diligence
procedure set out below must be followed before the establishment
of the relationship or carrying out of the transaction (or during,
provided that verification is completed as soon as practicable
after contact is first established and this is necessary not to
interrupt the conduct of business and there is little risk of money
laundering).
4.4 The Council is not required
to undertake the customer due diligence checks set out below if its
customer is another public authority, unless it suspects money
laundering or terrorist funding.
4.5 Applying customer due
diligence means:
·
identifying the client (unless their identity is already known and
has been verified) and verifying the client’s identity
(unless already verified) on the basis of documents or information
obtained from a reliable and independent source and assessing (and
where appropriate obtaining information on) the purpose and
intended nature of the business relationship/occasional
transaction:
o Where the
client is acting or appears to be acting for someone else,
reasonable steps must also be taken to establish the identity of
that other person (although this is unlikely to be relevant to the
Council).
·
where the client is beneficially owned by another person,
identifying the beneficial owner and taking reasonable steps to
verify their identity so that the Council can be satisfied that it
knows who the beneficial owner is. In the case of a beneficial
owner being a legal person, trust, company, foundation or similar
legal arrangement, officers must take reasonable measures to
understand the ownership and control structure of it. Reliance
cannot solely be placed on the statutory register of people with
significant control:
o In terms
of clients for whom the Council provides regulated services,
“beneficial owner” would include bodies corporate (eg
our public authority clients) and any individual who exercises
control over the management of the body (eg Chief Executive
Officer).
UNLESS the client is a company which is listed on a regulated
market, in which case the above steps are not required.
·
where the client is a body corporate:
o obtaining
and verifying its name, company/registration number, registered
office address (and if different, its principal place of business
address);
o taking
reasonable measures to determine and verify (UNLESS the client is a
company which is listed on a regulated market, in which case the
steps below are not required):
§ the law to
which it is subject;
§ its
constitution (whether set out in its articles of association or
other governing documents);
§ the full names
of the board of directors (or if there is no board, the members of
the equivalent management body) and the senior persons responsible
for the body’s operations;
o where the
client is a body corporate and the beneficial owner cannot be
identified or where the individual identified as the beneficial
owner cannot be verified as such, despite exhausting all possible
means, officers must take reasonable measures to identify and
verify the identity of the senior person responsible for managing
the body. In these circumstances officers must keep written records
of all steps taken to identify the beneficial owner, all action
taken, and difficulties encountered.
·
where another person purports to act on the client’s behalf,
officers must verify that they are authorised to so act, identify
them and verify their identity from a reliable source, independent
of both parties;
·
assessing and where appropriate obtaining information on the
purpose and intended nature of the business relationship or
occasional transaction.
4.6
Where customer due diligence is required, employees in the relevant
team must obtain and verify satisfactory evidence of the identity
of the prospective client, and full details of the purpose and
intended nature of the relationship/transaction, as soon as
practicable after instructions are received and before the
establishment of the business relationship or carrying out of the
occasional transaction. However, the legislation does allow
organisations to vary customer due diligence and monitoring
according to the risk of money laundering or terrorist financing
which depends on the type of customer, business relationship,
product or transaction. This recognises that not all clients
present the same risk. Satisfactory evidence of identity is that
which:
·
is capable of establishing, to the
satisfaction of the person receiving it, that the client is who
they claim to be, and
·
does in fact do so.
4.7 In the Council, details of
proposed transactions are usually, as a matter of good case
management practice, recorded in writing in any event and proposed
ongoing business relationships are usually the subject of Terms of
Business Letters, Service Level Agreements or other written record
which will record the necessary details.
4.8 Customer due diligence measures
must also be applied at other times to existing clients on a
risk-based approach and when the Council becomes aware that such
existing clients’ circumstances have changed, relevant to the
risk assessment, taking into account:
·
any indication that the identity of the client/its beneficial
owner, has changed;
·
any transactions which are not reasonably consistent with knowledge
of the client;
·
any change in the purpose or intended nature of the Council’s
relationship with the client;
·
any other matter which might affect officers’ assessment of
the money laundering or terrorist financing risk in relation to the
client.
Opportunities to do this will differ, however one option is to
review these matters as part of the ongoing monitoring of the
business arrangements, as is usually provided for in the Terms of
Business Letter, Service Level Agreement or other written
record.
4.9 Council staff conducting
regulated business need to be able to demonstrate that they know
their clients and the rationale behind particular instructions and
transactions.
4.10 Once instructions to provide regulated
business have been received, and it has been established that any
of the conditions in paragraph 4.1 above apply, or it is otherwise
an appropriate time to apply due diligence measures to an existing
client, evidence of identity and its verification and information
about the nature of the particular work should be obtained or
checked.
4.11 Most of the external clients to whom the
Council provides potentially regulated business services are UK
public authorities and consequently, as above, proportionate,
simplified customer due diligence measures should be undertaken.
Full details about the nature of the proposed transaction should be
recorded on the client file or suitable central record (kept by the
relevant team), and the identity of such external clients should
continue to be checked, along with other external clients (eg
designated public bodies). Officers should also then obtain the
appropriate additional evidence: appropriate additional evidence of
identity will be written instructions on the organisation’s
official letterhead at the outset of the matter or an email from
the organisation’s e-communication system. Such
correspondence should then be placed on the relevant client file or
central record along with a prominent note explaining which
correspondence constitutes the evidence and where it is
located.
4.12 In some circumstances, however,
enhanced due diligence (eg obtaining additional
evidence of identity or source of funds to be used in the
relationship/transaction) and enhanced ongoing monitoring must be
carried out, for example where:
·
there is an identified high risk of money laundering. Risk factors
to be considered include:
o
the type and nature of
customers;
o
the countries or geographic areas in
which a business operates;
o
where customers are
based;
o
customers’
behaviour;
o
how customers come to do business
with the Council;
o
the products or services to be
provided;
o
the nature of
transactions;
o
delivery channels and payment
processes (eg cash over the counter, cheques, electronic transfers
or wire transfers);
o
where customers’ funds come
from or go to.
·
the client is a “politically exposed person” (an
individual who at any time in the preceding year has held a
prominent public function in the UK, and EU or international
institution/body, a family member or known close associate). This
is unlikely to ever be relevant to the Council but the provision
must be included in local procedures;
·
the business relationship or transaction is with a person
established in a high-risk third country;
·
the client has provided false/stolen identification evidence and
the Council wishes to continue to deal with them;
·
the transaction is complex or unusually large, or there is an
unusual pattern of transactions, or it has no apparent economic or
legal purpose;
·
the nature of the situation presents a higher risk of money
laundering or terrorist financing.
4.13 Enhanced due diligence measures must
include
·
examining the background and purpose of the transaction;
·
increasing the degree and nature of the monitoring of the business
relationship to determine whether the transaction appears
suspicious.
4.14 With instructions from new clients, or
further instructions from a client not well known to the Council,
officers may wish to seek additional evidence of the identity of
key individuals in the organisation and of the organisation itself,
for example:
·
checking the
organisation’s website to confirm the identity of key
personnel, its business address and any other details;
·
conducting an
on-line search via Companies House to confirm the nature and
business of the client (including any registered office and
registration number) and to confirm the identities of any
directors;
·
where the client is a company, appropriate evidence might be
company formation documents or a business rate bill;
·
attending the
client at their business address
·
asking the key
contact officer and/ or any individual who exercises control over
the management of the body (eg the Chief Executive Officer) to
provide evidence of their personal identity and position within the
organisation, for example:
o
passport;
o
photocard driving
licence;
o
birth
certificate;
o
medical
card;
o
utility
bill;
o
bank/building
society statement (but not if used to prove address and no older
than 3 months);
o
National
Insurance number;
o
signed, written
confirmation from their Head of Service or Chair of the relevant
organisation that such person works for the
organisation.
If
such additional evidence is obtained, then copies should be
retained on the relevant client file or a suitable central
record.
4.15 Relevant persons are still able to rely on
the customer due diligence carried out by a third party if that
third party is either subject to the Money Laundering Regulations
2017 or an equivalent regime. However, the conditions for doing so
are prescriptive. The third party must effectively provide the
customer due diligence information it has obtained and enter into a
written agreement under which it agrees to immediately provide
copies of all customer due diligence documentation in respect of
the customer and/or its beneficial owner.
4.16 In all cases, the due diligence evidence
should be retained for at least five years from the end of the
business relationship or transaction(s). This could be used in any
future money laundering investigation. Such personal data should be
recorded and stored carefully and in compliance with the
Council’s information governance requirements.
4.17 If satisfactory evidence of identity is not
obtained and verified at the outset of the matter then generally
the business relationship or one off transaction(s) cannot proceed
any further and any existing business relationship with that client
must be terminated (however there are some exceptions).
5 Ongoing
monitoring and record keeping
5.1 Each team conducting
potentially regulated business must monitor, on an ongoing basis,
their business relationships in terms of scrutinising transactions
undertaken throughout the course of the relationship (including,
where necessary, the source of funds) to ensure that the
transactions are consistent with their knowledge of the client, its
business and risk profile; and reviewing existing records and
keeping due diligence information up-to-date. Particular scrutiny
should be given to:
·
complex or unusually large transactions;
·
unusual patterns of transactions which have no apparent economic or
visible lawful purpose;
·
any other activity particularly likely by its nature to be related
to money laundering, terrorist financing, or tax evasion.
5.2 Teams should also maintain
records of:
·
client identification/verification evidence obtained (or references
to it), and
·
details of all regulated business transactions carried out for
clients
for at least five years from the end of the
transaction/relationship. This is so that they may be used as
evidence in any subsequent investigation by the authorities into
money laundering.
5.3 The precise nature of the
records is not prescribed by law however they must be capable of
providing an audit trail during any subsequent investigation, for
example distinguishing the client and the relevant transaction and
recording the source of, and in what form, any funds were received
or paid. In practice, Council teams will be routinely making
records of work carried out for clients in the course of normal
business and these should suffice in this regard.
Appendix
C
Money Laundering
Report Officer Disclosure Process
1.1
It is important that the appointed MLRO (and deputy) are aware of
the National Crime Agency’s (NCA) processes for submitting
suspicious activity reports (SARs). SARs should be submitted via
the SAR Online platform. On appointment the MLRO (and deputy)
should create an account on SAR Online promptly.
1.2
Upon receipt of a disclosure report, the MLRO must note the date of
receipt on their section of the AML Reporting Form (Appendix
D) and acknowledge receipt of it.
1.3
The MLRO should consider the report and any other available
internal information they think relevant, for example:
·
reviewing other
transaction patterns and volumes;
·
the
length of any business relationship involved;
·
the
number of any one-off transactions and linked one-off
transactions;
·
any
due diligence information held;
and
undertake such other reasonable enquiries they think appropriate in
order to ensure that all available information is taken into
account in deciding whether a report to NCA is required (such
enquiries being made in such a way as to avoid any appearance of
tipping off those involved).
1.4
The MLRO should consider NCA guidance on how and when to submit a
SAR
in
evaluating the AML Reporting Form and any other relevant
information. The MLRO should make a timely determination as to
whether:
·
there
is actual or suspected money laundering taking place;
·
there
are reasonable grounds to know or suspect that is the
case;
·
the
identity of the money launderer or the whereabouts of the property
involved is known, or they could be identified, or the information
may assist in such identification;
·
whether they
should seek consent from NCA for a particular transaction to
proceed.
1.5
The MLRO should also consider whether the report indicates
suspicions of other crimes that should be reported to the Police,
eg a vulnerable person or child at immediate risk of harm, supply
of firearms, or modern slavery/human trafficking.
1.6
If the MLRO concludes that the matter should be reported then they
should do that as soon as practicable via NCA’s
Online SAR
Portal, unless there is
a reasonable excuse for non-disclosure to NCA (for example, if the
form has been completed by a lawyer and they wish to claim legal
professional privilege
for
not disclosing the information).
1.7
Where the MLRO suspects money laundering but has a reasonable
excuse for non-disclosure, then they must note this on the AML
Reporting Form; they can then immediately give their consent for
any ongoing or imminent transactions to proceed.
1.8
Where consent is required from NCA for a transaction to proceed,
then the transaction(s) in question must not be undertaken or
completed until the NCA has specifically given consent, or there is
deemed consent through the expiration of the relevant time limits
without objection from NCA.
1.9
If the MLRO concludes that there are no reasonable grounds to
suspect money laundering then they should record this on the AML
Reporting Form and give their consent for any ongoing or imminent
transaction(s) to proceed.
1.10
All disclosure reports referred to the MLRO, reports made to NCA,
and any subsequent communications from the NCA must be retained by
the MLRO in a confidential file kept for that purpose, for a
minimum of five years.