Anti-Money-Laundering and related financial crime issues

Key texts

• 4^{th and 5th} Money Laundering Directives & Fund Transfer Regulations
• UK Money Laundering Regulations
• Proceeds of Crime Act 2002 and Bribery Act 2010
• FCA’s FC guidance
• FATF Recommendations and assessments
• JLMSG
• Sanctions and Anti-Money Laundering Act and Russia Sanctions (EU Exit) Regulations 2019
• Economic Crime and Transparency Act and the new crime of “Failure to prevent fraud”

 

Money Laundering, Terrorist Financing and Sanctions

• Proceeds of Crime Act offenses – concealment, arrangements facilitates acquisition, use or retention, acquires or possession, failure to report, tipping off
• Overall risk management – identify and assess risks of AML and terrorist finance, MI
• Role of MLRO & Board members
• UN and OFAC Sanctions
• Formal policies and procedures

 

Client Due Diligence (CDD)

• Simplified, client and enhanced due diligence – in theory and practice
• Ongoing monitoring of transactions and review of client due diligence
• Client, country and activity risk rating
• Indicators of terrorist financing
• Sanctions screening
• Adverse Media Screening
• Third party reliance
• Expected account activity and monitoring against it

 

Identification of clients

• On-boarding
• Beneficial ownership and other controllers
• Client types (e.g. individuals, corporates, trusts, etc)
• Rules on Wire Transfers – labelling transactions
• Source of wealth and specific funds

 

Danger areas

• Distant transactions
• Politically exposed persons, family members and close associates
• Vulnerability of non-commercial bodies and public contracts
• Correspondent banking
• Shell banks
• Bearer securities

 

General issues with handling cases

• Suspicious activity report (SARs) and suspicious transaction reporting (STR)
• Review of ongoing relationship and client’s use of it

 

Bribery Act 2010 and new Prevention of Fraud Crime

 

• 1 Key texts
  Bribery Act 2010 & Ministry of Justice Guidance
  FCA’s FC guidance 6, 9, 13 & 17
  FCA Principle 8 (conflicts of interest)

 

• Bribery and corruption
  Definition – bribing, being bribed, bribing a public official and not preventing bribery
  Facilitation payments
  Bribery Act rules
  US Foreign Corrupt Practices Act
  International reach
  Commercial bribery
  SFO prosecutions
  FCA Final Notices
  FCA FC guidance

 

• Rules against inducements
  Rules against inducements – MiFID & COBS 2, ICOBS 2.3, MCOB 2.3
  Retail distribution review issues & COBS 6
  Gifts and entertainment policies
  ESMA guidance
  Sesame Final Notice

 

• Building sufficient procedures
  Final Notices covering insufficient procedures to prevent bribery and corruption
  Crime of not preventing bribery
  Whistleblowing
  Employee selection issues
  Training obligations

 

Prevention of Fraud Crime

• Preventing fraud by employees and associates
• The identification doctrine
• Putting proper procedures in place as a defence
• Self-reporting

 

General issues

• Whistleblowing
• Training obligations
• Employee selection issues
• Reviews of password access and other IT security issues