Hello. I'm welcome to today session on money laundering. Now Today we're particularly looking at Antoinette laundering policy and practice. Today. Session is aimed as an ad violence session at those people who are in a firm but are feeling the ball off. The compliance officer in relation to the new money laundering regulations on this session is particularly intended to be helpful to that person in terms of their developing their knowledge and understanding of what's going on in the wider context related to money, doing so in an international context. Some of the latest developments on some hints and tips for developing policies and procedures within your firm the S Our lives with his regulation authority have recently announced that they will be sweeping firms in order to look at their risk assessments related to money laundering. Onda also developing their policies and procedures and making sure people comply with the money laundering regulations. So now it's a good time to be doing this. Money laundering Webinar assumes a good level of basic knowledge about money laundering, so we're not going to go through the's the basic stuff around. For example, the definitions of Pat, what do we mean by money laundering. How we think about the view money laundering for Andi. What does that look like? Those things are not things that were going to be covering in today's session. We're not going to go through defences. The main main acts, those kinds of things we're really gonna focus in on types of risk identified internationally international key themes and how they relate to the money laundering regulations on. There's gonna be some pointers there around on developing your policies and procedures further so really does assume a very, very good knowledge or off the subject already. Andi, if you want more information, you know related to money laundering, there is a set of notes that companies the webinar that goes into more detail on our highlight points when necessary. But also there's further reading in their future girl. Why Hubble can do. But some of this really is presentation of interesting international public policy documents on some developments in anti money laundering that's worth being aware that might aid your compliant. So for as a money laundering compliance officer with with the regulations, I have filmed separate webinars relating to basic money laundering, and so either starting point for those people just starting that compliant journey or perhaps doing induction process with the law firm. So you know that sort of general basic knowledge of money laundering And then I have also attempted ones relating to latest developments in money laundering on money laundering related to theme, the solicitor's regulation authority on the council license commences, which covers the need to do risk assessments in more detail on highlights Some of the summary functions for those things within the risk assessments. So it's very important to pitch on, Get the right thing. If you're looking for a weapon, are related to the risk assessments of our there's already that up there with them. With Data Lord, there's various ones often related 20 money order, so you should be able to find moments right for you. This really is targeted at the compliance officer. For them to have that opportunity for that stretch and challenge on toe have a presentation in a different way off information related Teoh one Introduction Task hopes and other outside bodies who are considering anti money laundering on their latest positions in their latest hints and tips for developing your risk assessments for assessing risk and also how that relates the money. Laundry regulations, what their work they do and how you can build that into your phone. Show that international Don't mention your compliance and consideration of international factors related to risk so that you've got that evidence within within your firm of taking those things into account. My name's Katie Katie Jackson. I'm a compliance consultant. I've been working with law firms across the country for the last 67 years. Perhaps now Andi. Before that I worked for this list is Regulation Authority, the Law Society of England, Wales and also the Council for License Commences parte Order Those I worked with the legal Services commissions have been working with law firms now for the best part of 15 years, maybe a bit longer. But you struggle to think how far back in time it is. But also I work with your firms across the country, up and down the country on that AML policies and procedures. Now Andi think about making reports to the National Crime Agency, so developing their policies and procedures to ensure that there are adequately prepared for such a scenario on delivering training to people in respect of that as well. So let's look at the agenda for today session. We're gonna have a The starting point is just to think about the compliance officer. Well, what that means in the in. Respect off the money laundering regulations. I'm considering a more policy and practice in your firm somewhere that sort of six. The responsibility for that on the first part off the session really is going to be a focus in terms of the financial action task force. Guidance on developing policies procedures on also what they think about high risk situations. So they defined a lot of those out on this. It's a new guidance, the fact of published in consultation for But it's definitely worth going through on having a look at that saying, Let's pull up some interesting parts of that on disseminate that information out to you. So but they talk about is how to develop your risk assessment in terms of making sure your compliant on also is highlighting different high risk situations in all of those categories that you might want to build into your world risk assessment. So if you're responsible for clients with money launder regulations. You can take this information away from building until risk assessments to demonstrate how. How you didn't say the second point is about developing policies and procedures related tow, anti money laundering, and that's the second part of the weapon. So I pulled out some different things that you might want to consider bearing in mind what the s l. A saying the moment and also thinking about how you, as the compliance officer, can comport some of those things in with your with your policies and procedures and then finally thinking about Part three. We're going to look at a couple of things that happening at the moment, the latest developments in anti money laundering. So looking to the future, how that is going to pan out and you might be upset that's relevant to May. That's not relevant meal that's worth bearing in mind the's at some of the kinds of things that people think about some of the kinds of things that I might be interested in having a debate about, all that I might consider wear inviting my risk assessment, for example, or when building up my knowledge about intimate during our might start to keep an eye out. A Zaev said. This is an about section is not an introductory session. We're not going to go through those basic terms, which does assume a very strong I'm sounded of knowledge already have a about anti money laundering, so we're not going to go through the kinds of things that you would expect in the standard anti money laundry calls. Okay, let's move on, then, to having a look at money laundering regulations. 2017. Regulation 20 Board on. I'm just defining your compliance officer now for years. This is where I think is most relevant for this webinar to sit and provide that advice and support into that role. To sort to say These are some of the things to think about overall leaders from the papers to be having I'm reading if you're working on an international basis. So money laundering regulations. 2017 Regulation 20 Ball Where appropriate with regard to the size and nature of the business available person must I appoint one individual? He was a member of the board of directors or, if there is no your board, it's equivalent management body. So might be a senior management team orbits. Senior management has the officer responsible for the relevant persons compliance with these regulations and then goes on to say a ninja vigil in the relevant persons must be appointed as a nominated officer on when they're referring to, the nominated office said, referring to the money laundering reporting officer. And so there's two roles within the money laundering regulations. There's a world relating to compliance issue, like that person who provides that policy based support so as a firm that we're gonna accept these constructions of deploying them, house our policies and procedures, going to work in respect of this on. Then there's the difference with the money laundry reporting who makes those upto decisions about when to report to the NCS. So there's the separation of those two functions out. So you, you know, overloading the money, larger reporting officer with too much, But also that could be that separate review and challenge into those policies and procedures if necessary. And you can have somebody who just does the reporting for the firm and makes those decisions as they come about. But also those two things come bounce off and play off each other. So have those discussions with senior management of the firm now this weapon or is relevant to both. Money laundering reporting Officer added to compliance officer Probably if you're looking at on. In fact, they may even be the same person in smaller firms or where there isn't that necessity. 2.2 people, however, we're in the situation where a lot of times are gonna have that compliance officer for money laundering. Andi. I'm supporting that policy Development might be important. So let's move on into having to think about some of the papers that come out off the financial Action Task Force. Now you're likely to be familiar with financial action. Task Force is producing that fantastic map all around the world, and the mutual evaluations that they do abound different countries on what they look at, those kind of things that produces that fantastic list of high risk jurisdictions available in map form that you can go and have a think it's updated four times a year. Something like that. But the Financial Action Task Force has produced some really interesting guidance in consultation but likely to come out of publication for law firms and legal professionals around the world on this was put together by a variety of different legal professional bodies, including UK in the US and some of this on and has involved representative bodies from the UK Aziz Well, so really exciting for the UK to be involved in the Financial Action Task Force is an international body which sets thunders requirements for money laundering on counter terrorism on the is responsible has left said, for defining those high risk countries useful to have a look out, definitely go and have a website in detail. If you haven't is useful for the compliance officer to gain that international perspective is also useful for the money gold reporting office attack. That perspective, they're going to need to know and understand highways countries on some of these risks that come out if you're responsible for that developing its policies and procedures. Keeping an eye on financial action task walks on what they're delivering. Very useful resources from them in terms of, um counteracting money laundering. Andi dealing with those situations that marked of eyes on. So I just work for your mind if you want. Have a look at your thinking about compliance with the money laundering regulations on the Financial Action Task Force has something called the fact recommendations. OK, so this is where you are. I'm thinking about the recommendations that they put into place for countries for nation states, and this is the basis on which they perform their evaluations and make a decision as to whether something is a high risk country or not. We're going to have a look on the next line, some of the things they take into account. So if you're dealing with a high risk country or country where there's been an evaluation might have been particularly good, you can have a look at the kinds of things. If you read through their recommendations, you can have a look at the kinds of things that they assess. What the facts say about their recommendations is the fact recommendation set out comprehensive on consistent framework of measures which country should implement in order to combat money laundering on terrorist financing as well as the financing off proliferation of weapons of mass destruction. OK, so I'm that their recommendations are published in that regard, but they also do that very strong relationship to the money laundering regulations and, you might say this is by the European Union under UK, has drilled that down from in order to say these other things that we want to implement as best practice pull that time on. These are the kinds of things that nations are assessed against on a on a wide of Isis When dealing with them now, we'll always the leaving the European. You're likely to leave the European Union hands. It's important will be important for the future for us to gain equivalence or adequacy decisions in relation to a whole host of things, including money laundering. Andare on cooperation internationally without so all firms have an important role to play. In delivering that, I'm making sure that you understand anti money laundering. Make a short taking into account your phone, making sure they could deliver responsibly within your firm proportionately as well. So understanding works come from and the international importance of that and you doing your bit in terms of that in terms of supporting UK economy and making sure that we are having those mutual relationships and exchange of information with people are making sure that we can get that outside investment people have cold, didn't sinners is important. Let's move on, then, having a look at what actually say and some other things they take into account Financial Action Task Force recommendation. But definitely good read. If you want to understand the international importance of it, I'd also for you to understand that we're dealing with a high risk country might be a virus country that really is not complying with what we would consider are standing tall and some of their for the risks that are likely to be posed on. If you have some kids want the curse for somebody that's working towards something again, you get a better understanding of the geographical risk that that's likely to pose on the more detail you might be able to find out by looking at reports after what the specific name two of the risk is. So if you want to go into that level of detail, for example, if you're doing a lot of work with a country that's deemed because this, what's the situation in perspective that do we really know? Can we justify our actions by picking out some of those things so much? You know, this is what we're doing, and this is how committed game. There may be a place for that. Or maybe something you said Luxury bearing in mind. It doesn't meet our wouldn't meet what we record. What we're not going to continue to do business. You have to make that assessment yourself. So some of the fact recommendations are calling people toe do customer due diligence when establishing business relationship on having mechanisms for enhanced due diligence. So enacting that. So this is the fact recommendation to put the onus on the country to put those things in place. There might be criminalization off money laundering. Onda also predicate offenses as well and discouraging anonymous account. So nervous. Financial holdings Peps latest Andi making provision there People toe review Pepe status. Making sure that business is maintained and keep adequate records, particularly those exposed to money laundering. Miss such a solicitors. Accountants. No trees having a look on and making sure that beneficial ownership and control of legal persons is accessible. I'm being open toe. Identify um, making sure that criminals are not being professionally accredited or holding or being the beneficial owner controlling interest, having a pope for extradition mechanisms, having appropriate supervision mechanisms. So it's just having, for example, regulators in place of having mechanisms for freezing assets on implementing sanctions. Andi recognizing on legislating for or supervising, such as regulating the rest, to not profit agencies. So all charities on and on putting in place bulls around relating to structures for financial group and money laundering. Untitled up relates into subsidiaries as well, so it gives you an indication of some of the fact recommendations and what they asked countries to do on then what is actually taking place in some countries. So these are just a small sample and selection off some of the financial action task force recommendations, but it gives you an indication and flavor that some of these are actually quite complicated. I might be quite hard to achieve for a country that was Walt or, for example, highly unlikely to be observing these. These are some of the countries that sometimes do come out in the high risk assessment from family Financial Action Task Force. So these air their financial action task force recommendations for companies and do you go away and have a look at that because it gives you an indicator the standards that they are not collection task forces setting and what that looks like. Four countries. The Financial Action Task Force has produced a consultation document, which sets out guidance in developing a risk assessment for legal professionals. On that guidance goes quite far beyond the guidance that we see from, for example, some of regulators. Andi gives a lot of detail about different high risk scenarios in the notes that I've produced. There are details in their appendix A and Appendix B just sitting out there for you. Some of the client risks they receive and also the risks related to the services on that legal have professionals might offer as well. Now this document is just in consultation. At the moment there is a link where in the nosedive provided, but it does give you an indicator, as internationally. Some of the risks that people feel opposed to legal professionals on you might face. If you do business internationally or when you're dealing with business, that's in this country, can say what actually gets I have seen this world gives me another indicator. That something is a problem has been seen elsewhere in the world on this is regarded toe hide up this risk is regarded this international best practice. You'll also be aware that under the money laundering regulations you required to develop a risk assessment. The Financial Action Task Force provide an example risk assessment within their consultation document on what it says is to have a look on just a very simple one. Just having a look at Client West geographical risk and transaction risk, and then you. What it suggests is giving each one a risk weighting according to the matter that you've opened. So this would be done on on each fine on. Then you would specify underneath whether something was a high risk medium Miss Clovis, and give it a justification for that. So assessing planning risk what's client must provide justification. Assessing geographical escorts, geographical risking, providing a justification on assessing, trying I'm transaction risk. And what's a transaction risk in providing a justification on this could be up scaled if you want Teoh within your firm so you could do it to, say, general climbers, General geographically, general transaction risk And these are the kinds of things that we generally encounter. These are the kinds of clients we generally do business with, and these are the kinds of transactions that we generally take on so conducted for the climb but also conducted for the firm as well, and to provide an overall assessment as to whether the purpose it's within high risk, medium risk or low risk the money onto regulations get further by also having a separate category for services provided, although within the next identified by their Financial Action task force, that is services stroke transaction risk. However, that's been separated out in the money launder Michael Ations. I think perhaps, with the recognition that service that's being provided over Artemis and overall So, for example, convincing a new individual transaction within that might be higher risk than the mobile service provided the geographic risk that the fact of I don't like goes far beyond that identified by the high risk countries on actually provides further criteria. It's what I'd like to do now is to have a look at some of the factors that they Financial Action Task Force have highlighted in the categories of climate geographical risk on trying on transaction strike service risk Um, Paul, some of those out now these are provided in fall in the appendices relating to client risk and transaction risk within your notes at the geographic risk is completely on the next line, but you can go way Have a look. I've just picked out some of those things for thes from those risk assessments when we're talking about crime skin on geographic risk. So in the next few slides will go with her twin with you. But, girl, why? And have a look in your notes because they are produced in full on you could use this. Decide tick, tick, tick, tick. We deal with this, we wouldn't deal with all you can use as a checkpoint to try and say, Do any of these apply to any of these client risks applied to this individual transaction? Do any of these geographic risk applied to these individual transaction to any of these transaction risks applied to this Internet transaction? What about firm? Do we deal with any of these types of clients? Do we deal with any of these top of geographical countries? Do we deal with any of these transactions so you can then use it within your firm to further develop your risk assessment or have an international risk assessment based on what the facts say so. It's a nerve a tall for you to use to demonstrate compliance. Overall, actually, with the money laundering regulations to pour some of this in either that or you can take it as part of your risk. Is that your money laundry risk assessment and build it in so you can build it and say, Well, we've identified This has come from the fact we know this is an international problem. So I'm gonna highlight some of these over the next few slides. But do you go? I have a appendix, a appendix B in your notes, you know, just a pin count some of those risk factors for you to say. We know we could potentially build this in, and that's a template. It, like, attainable what it could look like. So let's have a look at geographic risk on this is a whole of what the facts say about geographic risk, and it goes beyond the high risk countries that the Financial Action Task Force have put in place. Okay, so what it says is not just high risk countries. There are other countries that may also pose threats as well, so you can build this in to your risk assessment so the 1st 1 is. Countries identified by credible sources is providing funding or support for terrorist activities, all having terrorist threats operating within them. The next one. Countries with significant levels of organized crime, corruption or other criminal activity, including transit countries with drugs, people smuggling on gambling. Okay, country subject to sanctions, embargoes or similar measures. Countries with weak governance, regulator systems on law enforcement and that includes the Financial Action Task Force. High risk countries Countries have been uncooperative in providing beneficial ownership information. Um, I'm not can be obtained from the Financial Action Task force Mutual evaluations on the O. E. C. D. Go before reports on then countries that permit the use of nominee shareholders are Bama shares. So you could find out this information some of it by doing a quick Google search. Some of that you might know and half our information already some of it you might speak into your clients about you might be able to find out some of this information, as I said, by simply looking in publicly available sources. So if you will, where any of these the countries that you do business with or vocally have toilets. One. If you get any climb from a country that falls into one of these categories, you might consider that it presents an additional geographic risk according to the financial task force, so you can potentially build this into your risk assessment. Now, As I have said, there is a long list very, very long list in dependencies to the notes are provided that sets out from the client risks on transaction. It's that the Financial Action Task Force have provided, and this is really useful information for law firms to take wear on an international basis. These are considered risk factors for money laundering. I've just picked up a few from that list at random on Do you might want to go away. As I've said, Have a look at that in more detail to pick up some of those risk factors and say, conduct your own assessment, Maybe make a note of that. So taking into account, it all helps to demonstrate that you considered, and you risk assess the practice overall so that you consider the situation with respect a 1,000,000 ordinary. So I have clients who offer unusually high levels of fees, trying to appear to be acting on behalf of another person without disclosing their identity. Clients who changed their instructions without appropriate explanation, particularly going to change their settlement instructions without appropriate explanation. Use of force loans or false accounting in anywhere in use of force invoices. Clients with cash intensive businesses or which no reason, appear to have access to a large amount of cash. I haven't transferred off a seat of company without genuine economic activity in a country. So why why is it being there? I'm certain activity from a previously dormant client on what does that look like? What does that mean? I'm client is reluctant to provide all of the relevant information. So if you've got any clients particularly secretive and this is sometimes highlighted within SA y and other risk assessments, just have a look at these risk factors. Now, I've just picked up a few there, but these are ones that common internationally as being indicators of money lodging. Some of these leave you scratching your head a little bit and say to yourself, What have you pinpoint what's going on in this transaction? How important what that looks like This is the kind of thing when you might be doing more work in order to establish what's going on behind the scenes. But they are. Indicators potentially often issue in relation to money laundering. They have been internationally. So do you go through that list that's in the appendices your nose just picked out here from there for you to have a look out on to potentially work into a risk assessment in order to ensure demonstrate your compliance. And in addition to that, there are financial action task force risk factors relating to transaction risk. So Lee's can again not just thinking about client, but also thinking about the transaction is a hole in the kinds of transaction that your undertaking, um on and the Financial Action Task Force have combined. As I've said, transaction risk with service with whether money laundering regulations require the two things to be separated out. Now you can assess the two things together, or you can use that list that's a second this provided in the appendix system, knows on a gain or just picked out a few things from that here. But do you go way? Have a look in more detail at your risk assessment and say, How can I pour this into my risk assessment? Do any of these factors apply on Do make you know you had looked and considered The situation may be revisited. Keep those documents for a later point to say this is worth going away and having a look up. So number one services where the sinister allows the client can't used in a business transaction. So not necessarily illegal transaction a business transaction services that improperly concealed beneficial ownership. So anything that you're putting together the mind not with your beneficial ownership and also wouldn't necessarily be detected services that rely heavily on new technologies. And so just be aware of that. Why they investigate toe, do you? What does that look? Payments received from unassociated and unknown third polities on and particularly where this would not be a typical method of payment for that client. Why have you got something? Implement their party to desist their party involved in this transaction. So having a look at the bank information when payments being received in and see where that when he is coming from is in import safeguard being approached for services about we should. Legal, professional does not have expertise on this is a useful safeguard in this situation is to have a thing where we say, well won't take instructions in relation to that. And if you have a very desperate phone, it's important to have those discussions with people say, Don't Dublin, where in areas way don't really understand the situation. So services for which legal professional does not have the expertise settlement off alternative judgments or dispute resolutions is made in a typical manner. So it's a situation. My something is not representative of how you would usually expect it to be done on. That may cause concern. So go through that I'm transaction factor list. All those services list there may provide you with more information of the kinds of things that seen internationally as being a risk for money laundering on you can combine that with plywood on also the geographic risk. Until what their financial action task force is suggesting is, you can use these risk factors Teoh populate your risk assessment and to fall a risk assessment on so you can say that this is high risk. This is media, Missus is Lois in relations that portal of those things out. But they highlighted that Now, as I've said, there are much more factors available in your appendices appendix A and also appendix big relating to their so thinking about that on bringing into a risk assessment could be could be very useful on this is the product off guidance has been produced the legal services sector specifically for them. So these are things that are being conducted for legal professionals, particularly on DSO. This come useful in developing and demonstrating compliance with the money laundering regulations. The within the same document, the Financial Action Task Force, have also highlighted on other risk factors, including that common which we know about. Some of them are highlighting holding client money as being an international risk factor on being a response to the world favor on anybody conducting work on another person's behalf. So conducting lots of transactions on another person's behalf, sometimes referred to as a man of affairs work is that is a risk factor for money laundering. Are these instructions being given genuinely, I'm wise work being conducted in this particular way? Is this something where you need to ask further questions about the bone deformities of the situation. Be genuine and ask yourself that question where there are no many directors on obscured ownership on Also, they also highlight conveyancing has particular risk as well. In terms of nominee directors, where you're potentially dealing with somebody who is no beneficial owner of the company. They have also produced a list of indicators. In respect of that is Belvita happily? So, um, I genuinely dealing with the beneficial in respect of this organization. So those include the profile of the director or shareholder is inconsistent with the activities of the company. The individual holds numerous appointments that unconnected companies. A nominee source of wealth is inconsistent with the value of nature of the assets within the company. Funds into on out of the company off sent to or received from unidentified third parties. The directors or shareholders are accustomed to acting on the instructions of the person on request or instructions are subject to minimal or no scrutiny on Door responded to extremely quickly without challenge by the individuals before purporting to act on behalf of they directors. It's a war of these potential risk factors for dealing with no money directors, so somebody who is not beneficial owner of a company where that might be a front being put up in respective respect of something. So just be aware, our flag that you're dealing with somebody who is a normal me acting on somebody else's. These are indicators of that situation. Now the Financial Action Task Force has been talking about internationally. Developing a risk based approach on this is also a feature off the money laundering regulations as well. What that says, and what that looks like on what they defined is that there are certain challenges in dealing with on developing respect, approach, on dealing with how to put into place within a lawful from what that looks like on those factors, includes where the you can develop a culture off compliance, whether there is a significant variation in client experience between firm. So it's not possible to prescribe the way in which a law firm should risk assess its kinds on in on, you know, pray for all those kinds and say this is money laundering. This isn't really don't drink. So everybody has a different experience, and people present in different ways on this means that I'm always getting invited is a particular issue you can't always prescribed circumstances on. That changes all the time. And there is a challenge in terms off making sure that legal services are transparent when historically they might not be. I'm not. More B boy people are using lawyers in the first place is to hide that level of transparency so they can for for good reasons, wanted to do that on DSO. Sometimes Also, transactions could be extremely complicated. On this can also hindered the development of a true it's based approach. You might be in a situation where something is highlighted is a major risk, but actually it's simply a very complex transaction, which takes further thought on the part of the individuals involved. While how do they interact with the compliance team? In respect of that, what does that look like? Do you need to have situation where processes swelling to a point? But there's a happy new out to an independent legal adviser, but somebody else have a look at the file and say, Yes, I do agree with that. That's a a risk all, actually, no, I don't and that person really needs to be very qualified in dealing with that in order to deal with that situation. There's also the risk of criminality on was the challenge that poses once it gets to a certain point. If a law firm has become involved in money laundering, they may have also become involved. You know, they adopt until Whitney. But they might become involved in criminal activity on so therefore starting to risk assess the situation and started to building compliance procedures with self incrimination in dealing with that. So there is an issue in respect of that, how that works and how that operates on. Those also need to play between compliance obligations on the situation around legal professional privilege on what that looks like on sometimes that is not well understood. People have used India's defense, all misuse it in some ways, and sometimes I get. So there is a distinction there. But also no everybody is an expert legal, professional privilege, not just course of problems. My own um, area of interest in respect of this is around developing a culture of compliance, and I'll talk more about a culture of compliance when we talk about developing your policies and procedures. However, what I will say is it's something which is extremely difficult to do. It almost has the effectively talking about call to change and involving people in that you're talking about society can offend individuals and dignity. Indeed that so it's something that I would treat with extreme caution. Andi, on this idea that you should build a culture compliant seems to be accepted by the Financial Action Task Force is actually something that I might push back on in terms of. You won't have an ethical standpoint, the leadership and it becomes a fundamental pillar of your work. However, the culture within the firm should be the culture that firm sets out to establish on. That should be what the firm would like to achieve week. It's simply have a set of compliance obligations or set of ethical obligations within society that we also have to by with and deal with. So we'll talk more about cultural composers in a minute. The final thing, the Financial Action Task Force report speaks about ease about supervision, on how that works and operates on listen and interesting interplay between the regulator on the regulated community on what they say is it's important for the regular to take a risk based approach to licensing on supervision so that, at the moment, sisters Regulation Authority and writing out all firms ask them about their compliance with the money laundering regulations upside to 400 firms, so they can then assess those 400 responses that come back in. What they might be doing is, um, something files Onda also thinking about what people's risk assessments on, whether they've got place. Financial Action Task Force recommends that some sample files taken on that there are testings of internal controls on that. Within that, you might be also thinking about testing to see make sure where the people are establishing beneficial ownership. A swell. Make sure that the law firm are going through the motions of establishing beneficial ownership off lines. There should be targeted practical training for the phone, speculate tree stuff so that they know how to understand situations of eyes and also the complications of certain situations. There is an interesting point that said that there shouldn't be any endorsement of third party or commercial antimony laundry products by regulators or regulatory stuff. However, there might be a case for targeted information sharing, confidential discussion of intelligence of feedback with the private sector. Now there's a way might be open to do this and also the CLC as well. But time will tell what form of supervision this is going to take and how that's going to work and operate. So will be interesting to see whether these things were adopted, by the way, seriously, on a formal basis and if so, what that looks like. So then let's we've all now to part two, which is about developing your policies and procedures even further. So as I said this a shame, some knowledge within anti money laundering. So we're just gonna take some of these points and think about it a little bit more about where we're going with laundry. The first thing I want to mention is a culture of compliance on how that builds and sits within your policies and procedures within your firm on what that looks like. There are significant challenges when dealing with this on you might, instead of thinking about a culture of compliance, think about the way in which the GDP are is presented on how that has efforts toe bait in data privacy into all policies and procedures. Taking a similar approach to antimony logic might be more favorable. So always considering intimate and laundry went developing your policies and procedures on ensuring your money. Larger reporting, Observing your compliance officer have that authority and seniority within building, but also with the organization within. Parent companies. On have that influence. You need somebody with the inputs. You also need somebody with the technical legal knowledge. You might also want to have 1/3 wheel if you live in order for that person to be able to say actually on, review a situation and say you legally we are satisfied that were on the right course here in terms of, for example, beneficial ownership in terms of complexity of the transaction. In terms of what's being done in this transaction that is actually in accordance with the law, there are significant change challenges in trying to build a culture of compliance on this is something where I may respond to this consultation. The my dissertation for my master's degree is in culture within legal services on, So I'm interested in this from a personal perspective. What I've covered in respect advised to say that generally speaking large organizational change programs generally, fame. Okay, there are significant challenges in affecting cultural change within organization. It is possible to think about defined firm culture, and I've done some work on this in some of my other data webinars, including, I Think, Everyday Coping coffer. But there's further information in your notes. Put some examples there of defining culture and what we mean by culture. You can have a go at that. If you want to pour that into your firm to think about, hang on a second. We do this. In what way is this what I would like our culture to look like? However, generally speaking, it's very difficult to effect. Called to change in any culture change program should be treated with the The people should be treated with respect. Dealing with potential culture change program, sometimes called to change poker, may offend some people's dignity. Needs to take account of accordion diversity, sexual norms. You're more likely to affect an ethical culture within for by the tone, I'm management of the leadership. So if we can set ethical standards by the leadership and demonstrate those behaviors, that's how we're going to communicate that across the stuff and that's being modeled in those behaviors. Those things that we want to see on a regular basis on those standards are being upheld by the leadership of the firm. There's a questionable whether we should require 1/4 of compliance, but really setting an ethical standard. Biding my modeling it in behaviors is a different way of doing things on. This allows a firm to adopt the culture it wants to overhaul, so that might be part paths, a liver, avoid a good, left it someone else compliance and becomes a pillar in the same ways with the GPR where you're taking it in. You also making any attempt of anti money laundry. So the culture really should support the intention of the firm. People may choose a firm basis, may choose the firm on the basis that actually this is the kind of work for so being aware of that thinking about it, but also making sure that you're aware of any quality and diversity issues in dealing with. I'm making sure you're respecting people's dignity. Doing that is important to spoke and society's norms should not be forgotten in respect of that very, very difficult to enforce a court to change program people if developing your policies and procedures. Have a look at this. This is something called the Three Lines of Defense on. This is something that has come from the bar took me committee on Banking supervision. This is something that they commit. People think about this. It needs wise. Andi, you've got three lines of defense is a for and you can set yourself up in this particular way and you will know how far something is gone in terms of how close is it? Cut to the bone feeling when you're dealing with a situation in terms of where it gets on your three lines of defense, does it therefore post of its on? Do we need to factor that into our risk assessment so you can use this three lines of defense if it gets passed? Say you're into a second or third line of defense. It might be something that makes your risk assessment the next time or when you need to put in place miss mitigation factors in relations, something so you can use this to evaluate whether something needs to appear. I make sure your capturing things in the right way. So your first line of defense is your policies and procedures, and they should be communicated to all stuff on set out. As I've said, high ethical standards, you should have training deliver tour stuff and it should be frequent. I'm not. Training should cover the kinds of things that you want your line stuff to be able to identify. So in the case of Without money, laundry might be politically exposed persons. It might be high with jurisdictions. It might be source of funds that might be source of wealth. All of these things should be there when you say what we're trained, and we understand how to deal with that situation without it necessarily being escalated unless it's a suspicion or where we need further information or in circumstances that prescribed by those policies procedures. The second line of defense is your anti money laundering officers. That could be your money reporting over. So your deputy Mullen on two important officer on your compliance off her person responsible for policies and procedures. They should be well trained, and they should be supported by the management board. If you care a situation that's being escalated, you can record what comes into your anti money laundering officers on. Then they can say, Well, we've seen this situation a number of times that's gonna be fed back into our risk assessment so we can feed that back in. We know that something is coming forward. Are we capturing? Everything is coming to our policies and procedures on the world. Training of staff is highly likely to draw additional issues that coming forward, Teoh. Then you've got third line of defense, and that's intern lorded on. That's going back and asking those questions to say what theocracies of the policies and procedures, What is the effectiveness of the compliance oversight on the quality control? So follow used. For example, Are you doing these reviews? And now they have quickly picking up issues on the effectiveness of the training of personnel. So we might go round and Sally, have you been trying? But that looked like an interview stuff in relation to that. There's also a world potentially for external auditors to play on. This is part parcel of the money Georgia regulations, but you can use your internal audit as feedback as well as took what else to put into your risk management process on again documented that further goto evidence your compliance with the money? Don't your regulations One of the things that's being talked about now in terms off the S always sweep off law firms is also making sure you've got an anti money laundering, annual report or documentary evidence. Having reviewed how something working in practice and making sure that is being implemented, there is from the joint money laundering staring green. An example. Money laundering on your report that's included within your notes. So it's a 10 place for you to use on an annual basis on it gives some different headings there for you to have a look at work out with the new business. That's an example there, within your notes from what it does is set sound at the beginning what the really larger reporting officers details are, and it sets out what start training has been provided. It sets out, but documentation. We have more policies and procedures are currently in practice in terms of money laundering. It sets out arrangements for monitoring systems and controls, so that might be your internal audit process, for example, and it provides a report on the money laundering reporting officers duty. So what matters been escalated on what I've been reported a suspicious activity report What has happened internally? In terms of reporting, you might have a port on systems and control. So, for example, your three lines of defense how far things got on what's been fed back through the system into your risk mitigation, what information is regularly reported senior management and what they like to see more management information on? What does that look like? Are there any transactions which have been excluded where we've turned down work, always been financial, excluded always had not been up to cover them for insurance reasons. For example, are there any business issues covering, for example, client due diligence? But what the pray for all of the matter is whether there's been any court orders that people have to comply with, So are there any points within that need to be pulled out? Do we need to change our policies and protecting perspective client diligence? Do we need to change your policies in respect of the transactions that we do? Has there been anything that's been very serious? It's been escalated on over optimally what is the overall assessment of our current system with antimony ordering systems and controls on what with the recommendations for action. So this is a report that takes into account all of those things on, then provides that feedback into management. You may also use internal boarded reports and external order tests while in compliance with the money religion regulations. So let's also take a minute to think about developing your policies and procedures so people pose the question to me. What are the latest developments in money laundering that can be covered where we have people with vulnerabilities and access issues in respect off, providing identification documents? And what does that look like? There were always around There's. For example, client is in a care home. You can have a letter from a care manager. There are different forms of identification may be acceptable on there's further details provided in your notes. So thinking about making sure thinking about making sure people have access. But also what are the latest developments technologically wants? And what challenges did they impose their on our people using Blockchain on loan from banking in order to support on define situations and systems related to anti money laundering. Andi. However, there are challenges relating to that. If people are using banking data, for example, in the open banking using mobile phone data, even some people using biometric data or genetic date in order to determine true identity. Okay, thieves concerned people bringing in identity documents into practice, for example, but be aware of ethical considerations and also general data protection considerations, as well as to whether or not people have genuine concerns about doing this, whether or no it is ethically fair. Teoh use these types of data, particularly if a group of clients may be vulnerable. There are ever increasing requirements, situations relating to know your client and anti money laundering. Andi. It becomes difficult to provide sometimes the evidence in order to pass in relation to those. However, there are also ethical considerations around making sure client data is being processed appropriately, and it's important to make strategic decisions that suit you on your phone. Asked how this works aren't operates, let's move on, then, to discussing the final part of the session, which is the latest developments in anti money laundering. So now let's have a look at virtual currencies virtual assets. This is something that's been on the agenda for a long time. I'm something that I've been discussing in a lot of my sessions. He is concerned round virtual wallet services, for example, digital currencies on This is something Now that final traction task force have set should be regulated on the providers within country should now be registered on. They should be regulated. So we may see a new regulator for digital currency on digital assets on their called gasps. So virtual assets on those and provide is the providers of virtual assets should be required in the same framers. Other businesses compliant with money laundering, so to take steps to identify, assess have to take effective action. Virtual assets are defined as digital representations of value that could be digitally traded or transferred on can be used for payment for investment purposes, including digital representations of value that function as a medium of exchange, a unit of account on on or a store of value. And so in that situation. And that way, a virtual set is something that can be traded virgin, honest, distinct fel, the rial currency of a nation. This is something as upset where there is likely to be regulation a lot to be established, potentially regulator to deal with this on where providers of virtual assets will have to take steps to comply with money laundering requirements. Finally, let's move on to looking at a law commission review that's ongoing at the moment of anti minute orgy. Now this webinar is being recorded in March 2019. On this review is ongoing moment. The Law Commission reviewing statutory framework relating to anti money Laundry on the following points may give you something to bear in mind. If you are thinking about the position related to anti money laundering relating to TICKLY, considering things that might develop in the future and how that might influence your policies and procedures on what you careful, they're considering whether there should be snatched regardless on what to look for in terms of reporting on a set format for submitting suspicious activity reports whether the current regime is too complicated, they are asking whether new tools could help enforcement on whether they should be geographic targeting orders. So in a particular area of the country, is they're concerned about something that's happening at the moment. I knew might be aware of that within your organization. You aware that if you deal with Cantor particular area, then there's a particular problem in relation to that. And that might be something use when submitting report to the National Crime Agency on It might be something you take into account in your risk assessment whether the should be a situation where assets can be frozen. But only certain parts of assets will be frozen within a bank account. For example, allowing a transaction to proceed If you're satisfied that that itself is not really in relation to criminal friends or isolating the aspect of the transaction, that is only in relation to those criminal friends. I'm providing details of what amounts to a defense of reasonable excuse for not making a suspicious activity book, because at the moment that is not defined. And then the final might be of interest as well to your firm's asking where the commercial organisations, rather than the individual employees, should be liable for failing to prevent criminal events. When an employee fails to disclose a special, so for the place in the onus on the organization to make sure people are well trade on to make sure they feel comfortable in making those suspicious activity reports. So this is something to bear in mind when training your staff on. Also, something to think about when discussing making suspicious activity reports with your stuff, always making sure to encourage them to make them if they were talking about circumstances. Transaction. Okay, so that brings us to the end of this weapon, are what we covered. We've looked at particularly policy and practice in relation to money laundering, and that has been done on an advanced basis. So this weaponize particularly targeting those compliance opposites for money laundering, bringing in some of those latest points from the Financial Action Task Force and also thinking about how they set out structure no risk assessment. I've also called in sources from other places as well of examples of things that you can use within your policies and procedures to further evidence your compliance with money laundering regulations. We've looked at Financial Action Task Force on developing your risk assessment on and what they say about the challenges in relation to that. We've looked at other wild days out there for developing policies, procedures and how those could be implemented. We I'm finished by talking about some of the latest developments in anti money laundry. There are clear opportunities to develop your policies and procedures in respect of money, laundry and to go away and consider your risk assessment on other things in respect of what we've seen in the weapon on today. So that brings us to the end of the webinar. Thank you. Very torching. Do go by and have a read of those notes which provide additional CPD for years on. Provide the highlighting of those client risk transaction risk in full detail This huge amounts in which you can then use to inform your risk assessment to demonstrate your compliance Demonstrate you've added in this international don't venture. Do you also take the time to complete the quizas well toe evidence? CPD You don't think
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