Money laundering regulations
The Money laundering Regulations where made under the proceeds of Crime Act 2002 and came into force on 1 st March 2004. The regulations apply to all relevant business such as,
- Deposit taking;
- Providing or advising on long-term insurance;
- Providing or advising on investments;
- Money changing;
- Estate agency;
- Casinos;
- Insolvency practitioners;
- Tax advisers;
- Accountants;
- Auditors;
- Legal services;
- The promotion and operation of companies and trusts; and
- Dealing in goods for cash over €15,000.
The Proceeds of Crime Act was passed to try to ensure that criminals cannot keep and enjoy the proceeds of crime. The act created a number of criminal offences such as,
- To conceal, disguise, convert or transfer criminal property or remove it from the UK,
- To be involved/concerned in an arrangement to facilitate the acquisition, retention, use or control of criminal property,
- To acquire, use or possess criminal property.
- To fail to disclose known or suspected cases of money laundering in the regulated area. Disclosure must be to the National Criminal Intelligence Service or the Money laundering reporting officer of the business concerned.
- To tip off the subject of a money laundering disclosure.
Relevant business must have in place internal controls for detecting money laundering and training of staff on how to proceed if they suspect an offence. These requirements also form part of the FSA rules.
There must be identification procedures that involve transactions of euros 15,000 or more. The customer needs to produce satisfactory proof of identity, and if acting on behalf of another person, then identity of that person. Evidence must be obtained as soon as practicable after first contact with the customer. The act does not specify what evidence is required but documents such as passport or driving licence are normally acceptable. For a corporate client a check with companies’ house should suffice.
Evidence of identity is not required where,
- Where the introduction of the customer has been made by another relevant business which has confirmed that the check has already been carried out, or
- Long term insurance in connection with a pension scheme where there is no surrender value, or
- Long term business where the single premium does not exceed euros 2,500, or
- Long term insurance where the annual premium does not exceed euros 1,000.
Firms can operate tougher requirements, but can not relax these requirements.
The FSA regards the breach of these rules as a serious matter.