Under new HM Treasury rules, businesses such as banks, estate agents, accountants and payment firms will have to carry out checks to make sure that money changing hands is from a legitimate source and will not be used to fund terror acts.
The Economic Secretary to the Treasury, Stephen Barclay, said: “We are cracking down on terrorists and criminals funnelling money through our financial system. Terrorist financing and money laundering are significant threat to our national security, and we are determined to make the UK a hostile environment for illicit finance. These new rules will tighten our defences, protect the integrity of our financial system and help protect the British public from terror attacks and criminal activities.”
From June 26, the European Union’s Fourth Anti-Money Laundering Directive (4AMLD) came into force. This takes in the UK’s Criminal Finances Act, which will give law enforcement further powers to recover the proceeds of crime, tackle money laundering, tax evasion and corruption, and combat the financing of terrorism.
The Treasury pointed out that after recent terrorist attacks in the UK, major UK banks provided critical financial intelligence to police.
Law firm comments
Eversheds warned that companies should ensure that their company secretary and/or any compliance teams responsible for providing corporate information to banks, lawyers and other regulated persons are aware of this new obligation. For more, visit the Eversheds website.
At the London law firm Gordon Dadds, Alex Ktorides said there are plenty of processes to put in place in short order and, as the old adage goes “there is no time like the present,” to complete a full review of risk assessments and internal policies. He offered these points:
– Undertake a risk assessment for your business;
– Sign up to an online verification system to make CDD [customer due diligence] relatively painless;
– Seek evidence of source of funds;
– Test riskier transactions and targets far more deeply;
– Train your staff to see the warning signs;
– Appoint a money laundering reporting officer (“MLRO”) to document decisions and to reflect on how many suspicions they have officially reported in the last six months;
– Regularly monitor riskier clients;
– Seek advice when yours and the instincts of your staff are warning you;
– Ensure that you have a procedure in place for internal confidential reporting of suspicious activity to your MLRO and for them in turn to make decisions on reportable activity and submission of reports where necessary to the National Crime Agency; and
– Keep records on CDD, transactional information and MLRO decision making and reporting for at least five years after the customer relationship ends.
He summed up: “Criminals will always try and launder money, and the regulated sector, and property professionals alike, are the first line of defence to prevent the financing of crime. With this in mind, you need to be alert so that you are not caught out when the inspector comes calling.”
For his comment in full, visit http://www.gordondadds.com/insights/finding-a-home-for-the-fourth-money-laundering-directive/.
For the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, visit http://www.legislation.gov.uk/uksi/2017/692/contents/made.
