The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
While Financial Crime is more relevant to some firms, it is important to be aware of the rules and the requirements which are contained within the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) and the Proceeds of Crime Act 2002 (POCA) which deals with money laundering offences such as ‘tipping off’.
Examples of the types of firms that the MLRs apply to include banks, building societies, credit unions, investment managers and stockbrokers, e-money institutions, payment institutions, consumer credit firms offering lending services, financial advisors, investment firms, asset managers and those providing safety deposit services.
Some key elements of the requirements include:
- Conducting Customer Due Diligence (CDD)
- Conducting Enhanced Due Diligence (EDD)
- Identifying the source of funds and wealth
- Determining ownership structure and beneficial ownership (where the customer is a corporate entity)
- Identifying Politically Exposed Persons (PEPs) and conducting sanctions monitoring
- Identifying suspicious activity, communicating suspicious activity internally and submitting external Suspicious Activity Reports (SARs)
- Providing appropriate and proportionate training to employees
The overriding message of the MLRs is that firms must apply risk-based customer due diligence measures and other appropriate measures to prevent a firm’s services from being used for money laundering or terrorist financing. These need to be appropriate to the size of your firm, the products you offer, the parts of the world where you do business and the types of customers who use your services.
Applicable firms must also appoint a Money Laundering Reporting Officer (MLRO). The MLRO supervises a firm’s compliance with its AML obligations including the submissions of SARs to the National Crime Agency (NCA), where necessary.
Applicable firms must also undertake a risk assessment to review the risk of a firm being used for money laundering and/or terrorist financing. This must inform the systems and controls in place at the firm to mitigate these risks. This must be updated on at least an annual basis.
The FCA’s rules that firms must adhere to are detailed in SYSC. In addition, firms should ensure they use the FCA’s Financial Crime Guide (FCG).
Brokers and Insurers
Brokers and insurers are not subject to the AML rules and the Money Laundering Regulations, however, they still need systems and controls to prevent financial crime and are subject to POCA. Therefore, it is suggested that mortgage and insurance brokers implement controls like those adopted by firms that are subject to the Money Laundering Regulations and the FCA’s AML rules.
Fraud is also a type of financial crime, and all firms must have controls, policies and procedures in place to prevent and deal with this should it occur. Fraud can be internal or external and firms must ensure all staff are trained in respect of it and aware of the reporting requirements should fraud be identified.
Bribery and Corruption
Alike with fraud, bribery and corruption is also a type of financial crime. Firms should have adequate bribery-prevention procedures in place to mitigate the risk of bribery and to provide a defence if charged with an offence under the Bribery Act 2010. Senior management should ensure that the firm conducts its business with integrity and tackles the risk of bribery and corruption. This is achieved by undertaking an appropriate risk assessment and ensuring that employees are appropriately trained, be aware of what constitutes bribery and corruption and how to act if it arises.
How Can Scott Robert Help You?
Are you interested in learning more about your obligations or ensuring ongoing compliance with financial crime rules and requirements? Scott Robert can help with your ongoing compliance needs.
When applying for authorisation with the FCA, and depending on the activity you wish to undertake, you will need to complete a money laundering registration with either HMRC or the FCA. Your Regulatory Adviser will determine this for you and can also assist with registration. Each client who works with Scott Robert is assigned a dedicated Regulatory Adviser who will support you throughout the service, answering any queries you have and provide you with guidance and support, which includes compliance with the rules and regulations.
As a firm that is subject to the MLRs and POCA 2002 as well as the FCA’s financial crime rules, you might need help to ensure that you comply.
We provide our clients with the support they need to maintain compliance and avoid breaching the rules. Our bespoke service is individually tailored to each of our client’s requirements, objectives and budget.
Whether you need documentation to help you remain compliant, would like ongoing advice or support, Scott Robert may be able to help. This may include:
- Reviewing policies and procedures
- Identifying any gaps in existing policies and procedures
- Assisting with the creation of policies and procedures
- Assisting with risk assessments
- Assisting with CDD/EDD obligations
- Assisting with transaction monitoring
- PEP and sanctions reviews
- Form-A application for MRLOs (SMF17)
- SUP 12 notifications e.g., concerning fraudulent activity
Why Choose Scott Robert?
Scott Robert has been supporting firms since 2008. In that time, we have helped hundreds of firms to maintain compliance and remain abreast of changes to the regulatory landscape, including but not limited to the 4th Money Laundering Directive (4MLD).
We employ a team of compliance professionals who are both highly experienced and expertly skilled. We specialise in providing our clients with solutions to often complex regulatory requirements and compliance needs.
Our knowledge of FCA compliance enables our team to support you and your business, provide effective solutions to any problems you face and help you to devise and implement strategies that work for your business and your customers.
If you want to know more about establishing and maintaining compliance with the MLRs, POCA 2002 and the FCA’s rules, speak to one of our experts today for confidential and no-obligation advice by calling 0161 413 2796 to find out more.
You can find out more about Anti-Money Laundering and Countering the Financing of Terrorism by downloading our free factsheet from the “Access our factsheet” section below.