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CISI LEEDS23rd May 2013
John Horan BA (Hons)MICT Ltd
Tel: 02071250147Mobile 07733887262
Website: www.mict-ltd.com E-mail [email protected]
Some common acronyms
SAR = Suspicious Activity Report
SOCA = Serious Organised Crime Agency
KYC = Know Your Customer
KYR = Keep Yourself Right
SAR
Written internal report with regard to suspicious activityNote activity not “transaction”
Could be the client
What he/she wants
Where they want it
SOCA
Home of the United Kingdom Financial Intelligence Unit (FIU) Previously National Criminal Intelligence Service
(NCIS) Before that National Drug Intelligence Unit (NDIU)
Soon the be the National Crime Agency (NCA)
SOCA covers England, Wales and Northern Ireland
NDA will cover England and Wales (at the moment)
Know Your Customer
Beware of: secrecy insufficient or suspicious information
Needs to check with someone else activity inconsistent with normal business
Business lacks viability but continues to trade sudden changes in transactions particularly upwards See saw effect does not follow market
Take all reasonable steps in each particular circumstances
What is the rationale behind the instruction or business.
Do not generalise or stereotype
Know Your Customer
Key areas
Risk based approach (CDD & EDD) All bodies FATF etc. recognise Money Laundering
cannot be completely eradicated Prescriptive approach abandoned
PEPs and Sanctions
Senior Management responsibility
A risk based approach
Risks posed by the client Complex business structure with no legitimate
commercial rationale Easier to conceal underlying beneficiaries
Politically Exposed Persons In a public position and/or location which carries
a higher risk to exposure of corruption Based in, or conducting business in/through high
risk jurisdiction Business involves significant amounts of cash
We do not deal with criminals!
Money Launderers come in all shapes and sizes The bigger the money launderer the more
legitimate he appears A veneer of respectability often hides a corrupt
interior It is not difficult to fool even an astute person
Why launder?
Prevents unwanted attention from Law Enforcement
Prevents victims retrieving their property or being compensated for their loss out of criminals proceeds
Ensures profit from crime available for Lavish lifestyle, holidays, etc Re-investment in criminal activity
Who launders?
Organised Crime Paramilitaries Drug traffickers
Tax evaders!!
Legislation
Money Laundering Regulations 2007
Proceeds of Crime Act 2002
Terrorism Act 2000
And a plethora of amending legislation!
Legislation
Money Laundering Regulations 2007Imposes obligations on the regulated
individual/firmPoliced by the designated regulatory bodies
ICAEW, HMRC, FCA, OFT RPA etc.
Can prosecute/penaliseBreaches used to corroborate money laundering
charges
An implementation guide to the Money Laundering Regulations 2007
SeniorManagementResponsibility
SeniorManagementResponsibility
Ensure staffunderstand
training
Ensure staffunderstand
training
Createprocedures and systems
Createprocedures and systems
Train all relevant staff
Train all relevant staff
Risk based approach
Risk based approach
Appoint MLRO
Appoint MLRO
Review procedures
annually
Review procedures
annually
Money LaunderingRegulations
2007
Money LaunderingRegulations
2007
Legislation
Proceeds of Crime Act 2002Creates the money laundering offences
Targeted at individuals
Wide ranging and draconian
Provides for restraint and confiscation
Offences under the Proceeds of Crime Act 2002
Enters into
An arrangement
Which facilitates
Acquisition retention
Use or control
Enters into
An arrangement
Which facilitates
Acquisition retention
Use or control
Tipping OffTipping Off Failure to
disclose
Failure to
disclose
AcquisitionUse
Possession
AcquisitionUse
Possession
Concealing, DisguisingConvertsTransfersremoves
Concealing, DisguisingConvertsTransfersremoves
Proceeds
of Crime
Act 2002
Proceeds
of Crime
Act 2002
Legislation
Terrorism Act 2000Criminalises the financing of terrorism
Principal difference to Money LaunderingFunds can be from a legitimate sourceSmall amountsTerrorism can be a cheap crime
Who investigates?
52 Territorial Police Forces in the UK less now that the Scottish have amalgamated
3 Special Police Forces Ministry of Defence Police (MDP) British Transport Police (BTP) Scottish Drugs Enforcement
Administration (SDEA)Other agencies
Serious Organised Crime Agency (SOCA)
Her Majesty’s Revenue and Customs (HMRC)
Department of Works and Pensions (DWP)
Social Security Agency (SSA) Serious Fraud Office (SFO) Financial Conduct Authority (FCA) Prudential Regulatory Authority
The Bribery Act
Government guidance• Tough rules...directed at making life difficult for the
mavericks responsible for corruption• Largely about common sense• Core principal proportionality• No one wants to stop firms...taking their clients to
Wimbledon• Creates clarity and a level playing field. (Kenneth Clarke Secretary of State for Justice
Mar 2011)
The law enforcement attitude
Legislation is designed to be self enforcing The old standby, good systems and procedures Likely to be regulator enforced rather than
Law enforcement agency enforced.– LEA enforced usually means gone over to the
“dark side”– Regulator enforced usually means breaches –
deliberate, accidental or negligent
The law enforcement attitude
Be careful! All agencies will be looking for a quick win
“pour encourager les autres” Witch hunts will not be on the agenda Remember an offence under the Bribery Act
may form the predicate offence under the Proceeds of Crime Act 2002
Predicate offence?
Forms the basis for a money laundering investigation
Bribe of £50,000 to win contract of £2million– All £2million = proceeds of crime = confiscation– “Fruit of the poison tree”
Confiscation orders
2008/2009 – 5,382 orders made for £145.5million £62 million
2009/2010 – 5,335 made for £134.6 million £64.2 million
2010/2011– 6,231 made for £195.4 million £74.5 million
2011/2012– 6,150 made for £161.6 million £104.2 million
2012/2013– 6,227 made for £277.5 million £108.3million
4MD
The Fourth EU Directive on Money Laundering Key areas of change
– One off limit reduced from €15,000 to €7,000– Previously Casinos only caught by Due Diligence
extended to other gambling institutions– Tax evasion to be predicate offence in all EU
countries (already is in the UK)– PEPs to include domestic PEPs
CISI LEEDS23rd May 2013
John Horan BA (Hons)MICT Ltd
Tel: 02071250147Mobile 07733887262
Website: www.mict-ltd.com E-mail [email protected]