1. Tackling money laundering
Risk update:
Tackling money laundering
Colette Best, Policy Manager

2. Money Laundering: Why do we care?

3. Why do we care?

4. It’s not about compliance
It is about …
Stopping terrorism
Preventing drug trafficking, illegal arms dealing, child exploitation and other crimes from being profitable
Maintaining the integrity of the profession
Keeping your firm and staff safe
This is why preventing money laundering should be important to firms.
The title of the presentation you’ve been given is misleading – firms should care less about compliance than doing the right thing

5. Where’s the risk? Product and services Clients Transactions
Delivery channel
Geographical
Product and services risk (trust and company work; conveyancing; client account)
Client risk (politically exposed persons; cash; customers seeking anonymity)
Transaction risk (large transactions; e-currencies; unusual or new transactions; transactions facilitating anonymity)
Delivery channel risk (remote clients; payments to/from third parties; combining services)
Geographical risk (sanctions; corruption; non-equivalent AML standards).

6. Some things we have seen
Fraudulent property investment schemes
Funds and clients from high risk jurisdictions
Funds paid into client accounts from unknown third parties
No underlying legal service or purpose for transaction
False and misleading information recorded in client files
Facilitating fraud
Tax evasion  
The SRA is required to have an MLRO to report any suspicion of money laundering or terrorist financing to the NCA
Any concerns that anyone in the SRA has gets reported to the MLRO through an internal SAR (suspicious activity report form) and she then makes a decision about whether to make a SAR to the NCA or not, or whether to investigate further.
The MLRO is the person at the NCA that sees all the latest trends.

7. What are your obligations?
Know your risk
Have a plan
Train your staff
Identify customers, their source of funds and wealth
Monitor business relationships
Report suspicious activity
Keep records

8. Our perspective on AML compliance
Are we nearly there yet?
Our perspective on AML compliance

9. How are firms getting on?
Intelligence from:
Thematic reviews
Surveys
Enforcement action
External agencies
Concerns
Levels of compliance with regulations
Submitting suspicious activity reports (SARs)
Risk assessment
AML thematic review considered the implementation of the 2017 Regulations
50 firms (25 large, 25 small/medium) involved
Generally positive results, but some areas of concern
Referral of six firms to disciplinary
Full report available online
Future thematic reviews in 2018 on conveyancing and trust and company services work

10. Example: Firm’s risk assessment
What we are looking for
What isn’t enough
Takes a considered and thoughtful approach to identifying and identifying risk
Reflects who your client is
Understands the risks from services
Considers your firm’s transactions and delivery channels
Considers geographical risk
Not written down
Not kept up-to-date
Doesn’t consider the national and the SRA’s risk assessment

11. SRA focus for 2019 Remains a high priority
Focus on firms’ risk assessments and suspicious activity reports
Warning notice coming soon
AML thematic reviews
Investigating AML-related cases
Focus on high end conveyancing - (prime and cash purchasers)

12. What’s next? Implementation of the 5th Money Laundering Directive
Possible changes from the Financial Action Taskforce Review
An increased government focus on sanctions and preventing economic crime
A new suspicious activity reporting regime
5MLD – likely to see a policy consultation towards the end of 2018 and consultation on legislation early Legislation comes into force late 2019/ early Don’t expect big changes, more of a tidying up of bits left over from 4MLD implemented through the 2017 money laundering regulations.
Will bring an increased focus on independent AML supervision, possible changes to criminality checks for beneficial owners, officers and managers and requirement for supervisors to publish an annual report. For the regulated sector it will mean more importance place on transparency of ownership, particularly in trusts.
We are expecting the results of the FATF review imminently. If FATF have found issues with the way the UK supervises then we will need to make changes as a result. Early indications from HMT are positive but the review tends to lump in all the accountancy and legal supervisors so there might be changes required across the board.
The new National Economic Crime Centre has been set up with £48bn funding to tackle money laundering and wider issues, so there will be increased scrutiny by government in this area. We know that the Office of Financial Sanctions Implementation (OFSI) is increasingly interested in the legal profession.
The Law Commission has recently consulted on changes to the SARs regime and there is a NCA project underway to improve the IT infrastructure for reporting.

13. Help is available Risk Outlook, national risk assessment,
sectoral risk assessment
Warning notices
Thematic review findings
Legal sector guidance
Professional ethics helpline and webchat

14. More information