Hello and welcome to this data law. Webinar on the money laundering compliance officer on money laundering reporting officer, The roles explained. My name is Trevor. Hello. Well, I am a solicitor. I've also Bean. Alexa will practice management successor at one point in my turn, but actually spent the bulk of my career on the training and consultancy circuit discussing a wide range of things. Anti money laundering being the key one. But there are the camp rules codes of conduct compliance Jeannie PR on all of those things for nine on three decades. Now what I want to do in this session is just discussed. The new roll off Money laundering compliance officer, which was first introduced by the money laundering regulations of 2017 and I just wanted to ask you who can be an ML CEO is how I'm going to refer to it. What is the role of the ML CEO? What is the Inter relationship with the money on drink reporting officer, which is an office that most firms have had for many a long year since Indeed, the money laundering regulations of 2003 in fact and I also wanted to look at the key responsibilities of both of these roles under the money laundering regulations of 2000 and 17 and I just wanted one to add to that the gloss off what the S. R. A have said in their recent Ege orations in May of 2019 as to what they regard the key position to bay the money laundering compliance officer is a Nero created by Regulation 21 off the money laundering regulations of 2000 and 17 and it says that firms must wear appropriate to the size and nature of the business. Consider whether they need to appoint a money laundering compliance officer, which implies that it's entirely optional. You can think about it and decided not to bother if you wish, though that isn't I think the SA raise preferred approach. Specific duties, which are allocated to that role by Regulation 21 comprise the vetting of the firm's staff, and I would argue that the vetting of the staff should be done not only appointment where obviously we need to be checking references and criminal records searches and so on, but also dure ing their appointment to make sure that they are not succumbing to financial pressure from somewhere which might increase the risks they close to the firm. This is part of the appraisal process that I think one might be conducting on their on on their part on its the money golden compliance officer. That has to ensure that this occurs. The other key requirements are that the money aldrin compliance officer, whoever that might be, must independently audit the firm's policies and make recommendations accordingly. And finally, it provides that they must also appoint a money laundering reporting officer has, if that hadn't been done already. Now what it says in Regulation 21 in this is the sort of gloss which I'm bringing to it in the light of the SA raise recent investigations into law firms procedures is, I think, frankly, we all need to delete the words. Consider whether we need to appoint a money laundering compliance officer. I think the accepted wisdom and certainly the SA raise approach would seem to be that firms must appoint a money laundering compliance officer unless they are so practitioners, obviously, in which case the normal rules don't apply. But I have been saying for some period of time now that any firm of any appreciable size needs an ML CEO on the this, this opinion, I think, is justified. This must be thought about as part of the firm's overall assessment of risks to the organization. And I think the SA raise view on this is that the risks are now so obvious and apparent that not toe have somebody in in this money. Children complain. Troll is an omission. Now, unlike the money laundering reporting officer, the money laundering compliance officer must be a director, a member of the firm's board of management or in some office of other equivalent standing. In other words, they've got to have the power and the authority to be able to dictate policy on procedure. And if they say jump, we jump in order to be the money laundering compliance officer. Now, obviously, there's some overlap with the money laundering reporting officer, and frequently these two roles will be combined in one person because historically, the money laundering reporting officer, this had to have a certain amount of clout. And that's bean vested in one of the partners, possibly even the managing partner. So there's no harm in him also being the money laundering compliance officer. But there is a mental division between these two rolls because they do have distinct responsibilities. How I would roughly summarize it is that the money laundering compliance officer is charged with working on the business. He's got to put risk assessments in place. He's got to vet the staff. He's got to set the policies and procedures, monitor them, make recommendations and so on. He could make sure the infrastructure is in place. The money laundering reporting officer, on the other hand, works in the business operating those policies and procedures on the ground, receiving reports from staff when need be Andi, then, if appropriate, passing that on to the National Crime Agency. And that is the reporting officers key role and the money laundering reporting officer need not have any particular ownership or management board rank. They must merely be able to investigate and file reports where appropriate, as always, have got the power to do that. Then that is all that's necessary of the money laundry reporting officer. Now, just some further thoughts on this. Yes, I has required all firms to complete an online form requesting information about who the money laundering compliance officer is who The money laundry reporting officer is if different and who is involved in the management and ownership off the practices. Because this is also a requirement off the new regulation. Now they did that well over a year ago. The deadline for completion was the second of February 2000 and 18. But as I already indicated, the S. R. A are currently undertaking their second risk assessment, consequent upon their first risk assessment from March 2018 and under pressure from the National Crime Agency and up bass there now having to do a further assessment. And they've asked 400 firms for their views and in the course off the risk assessment, they have indicated that in their view, an appointment of a money laundering compliance officer is effectively necessary in Aled but the tiniest of firms. But I've made that point already, so I think if we buy into the idea that we're gonna have one fine, it's gotta be a board level responsibility on it has these particular specific duties, which, as we're saying, Iran consists primarily of the vetting off staff. Now it is suggesting in the money laundering regulations that it's only the new staff. But I would argue that it's all the staff, frankly, and the point that is making is that it is critical. But we look at the staff were engaging in our law firm business because the wrists can come from within the practice Justus, much as they can come from outside. So on the appointment of any new staff, we need to be checking their skills, their knowledge, their expertise, their conduct on their integrity to see whether they're worth employing or not. Because there have been examples, as I'm sure we're aware, off firms engaging people as part of the accounts team who were wrong comes from the start. But the firm never seemed to ask, never took up references. Never did DBS checks on Dwyer ripped off by the, um, the appointees. So on appointment, we need some routine checking off all of the credentials offered by the applicants, but then, throughout the time of engagement with us, we need to be checking their continued duties. We need obviously to be picking up on any overt criminality, but also any inadvertent breaches any personal financial crises for any other issues that may exert pressure on them, and I would think that the place to do this is part of TheStreet af appraisal process. No, it's It's a difficult one to work out this because, you know, if you say to people you know, how does the gambling been going, they're unlikely to fess up to the fact that they're deeply in debt to the Mafia. But your hair? What else can you do? No, this is not the point of this webinar to discuss and debate how the staff appraisal processes to be conducted. But I think what I would offer to firms is the idea that we ought to be offering to the staff all of the support they mean may need if they are hitting some financial or personal crisis, because clearly there are risks to the firm's in financial integrity. If somebody's gambling problem gets out of hand and they are in debt, I mean Nick money out of client account to pay for it and cover their tracks, you know, and that they're not going to admit that under questioning. So we need to be a little bit more subtle about looking out for the indications that such might be happening on despond accordingly, with a save the appropriate office of support. That is the theory. The second key duty is the independent audit off the procedures. Having the procedures in place is one thing, and obviously updating them and upgrading those procedures is clearly part of the process. Which the s r. A. Of seeking to investigate right now. But having the processes and making that sure they're working, making their updated nor, I can say, is one thing. But making sure that actually happening is the next and most important part of the NL CEO's role. Now, it says in the legal sector, Affinity group guidance notes that this audit need not necessarily be external to the firm. As long as you can find somebody inside the firm who can probe and test the procedures and make sure it's all working properly and make reports and recommendations. That's fine, but I personally have Bean engaged by several kinds to come and do this independent order. It, uh, which seems logical to me that doesn't have to be independent, but the idea that doesn't have the external to the firm, but it does need to be independent over the process itself. It's an external view of whether the processes and procedures are right or adequate. What the audit should then do is a salmon and evaluate not only the adequacy but also the effectiveness of the policies, controls and procedures in place. And what I would say on this is that obviously we have a CD procedure which involves us getting copies of the passport and utility bills, everything else. We may rethink that as part of the opportunity to rethink our risk assessment processes. But whatever we put in place, we must then make sure it happens. And I'm just minded to think that I waas in fact a client a year or so ago, and I went into the firm with my identification evidence and they smiled nicely at me. Does that? I think you're supposed to copy it. 00 right. Okay. So they took it from me and wept it through The photocopier on gave me my documents back and I left and I thought, that's not customer due diligence. That's photocopy on what I would say, and I am saying this in public or so they won't to to any firm little listen is that I think there will come some scrutiny from the regulators as to exactly what we are actually doing in relation to customer due diligence. Okay, we knew were collecting this information, but we need to be checking the photographs. We need to be checking the names, the addresses, the dates of birth links with the property. If that's a property transaction, we need to be checking certificates of incorporation, registered office addresses, constitutional documentation and so actually reading it to see whether it correlates with the information that we have on file for what good that might do us. But nevertheless, I think that is part of the process. It says it in the rules, and we have got to do it. And I think that is possibly where the firm has got weak over the years. And then, obviously, when one was investigated, the nuts and bolts of the process one, as the independent auditor can make recommendations to the firm on then, In theory, one monitors the firm's compliance with it, and this is again part of the money laundering compliance officer's role and functions. So what? I think the other part of this audit process should be isn't not only checking the policies and procedures just to make sure their up to date that they are properly risk assessed. The firm has taken into account all of the areas for risk assessment that they're required to take into account. And then, of course, that they are indeed, in fact, operating us. Indeed, they should. The other bit of inquiry, which is not actually picked up by the regulations a tall is source of wealth and source of funds Enquiries differentiate between these two because source of wealth, I think, is a general conversation with our clients about where they get their money from. You mean, what kind of work do you do? What kind of salary do you have? What kind of savings have you got? What kind of Children in regard to the other private school have got holiday homes in France, seal general conversation with an individual client and a similar conversation with corporate client? What kind of operations do you run? What kind of profit margins have you got to have a look at your latest accounts just to sort of see whether the transactions that were instructed on are consistent with what that picture is that we have of our clients and their means and wherewithal. I would support that line of inquiry with a brief mention of the unexplained wealth order, which is of course, being used only in one case, but against that woman whose name escapes me, I'm afraid, but who spent £16 million inherits over the course of the decade. £400,000 on jewelry one afternoon and £36,000 on tea and coffee, for heaven's sake. But she was asked where she got her money from because her husband is currently in Azerbaijan, in jail on fraud charges. So these seem to be legitimate inquiry on because she couldn't justify where the money had come from. She's being made subject to confiscation all that. Now, if that is what the officials can demand of our clients, I see no reason why we can't ask exactly some of the questions if you bear in mind that what the whole of this structure is a pact is to make sure that we are not inadvertently used as a front for illegal money movements. So we just need to be asking those questions as well. But orderly, it isn't specified anywhere in the regulation source of funds. Enquiries are a lot more focused. And I think this is asking the client about where the funds that were going to be handling us part of the transaction are expected to come from. Uh, okay, we're expecting a deposit from the bank of mum and Dad to have an account in the Royal Bank of Scotland. So the deposits going to come from the Royal Bank of Scotland, then if it then comes whistling in from some offshore trust in the British Virgin Islands, then we can ask about that. And if we're happy with it, and obviously we can get on with the job. But if not, then we need to be pushing panic buttons. So you know, all of this source of inquiry is, I think, required by the regulations and procedures. And it's exactly that that the independent audit should be checking out. Now. Of course, the other thing which the money laundering compliance officer must do is appoint a nominated officer, a money laundering reporting officer. Now, this can be the same person, and of course it frequently will be but it could be somebody else and perfectly comfortable. But a few other thoughts that I would just offer to the money laundering compliance officer as a role holder is that I think to some extent the expectation is that you will become the firm expert. The money laundering compliance officer should know everything there is to know about the law, about the policies, about the risk assessments, about the procedures that we put in place in response to those risk assessments. And if anybody has any queries about any of this, then it should be to the compliance officer that they go because the compliance officer has the clout, the authority, the responsibility and arguably the knowledge to deal with any queries about clients about the matters about the geography where they can conducted about concerns, suspicions whether to report it, who can say what to whom after we've reported it. They're also the backstop for our rate client enquiries. People ring in and say, Why isn't anything happening with this? Or just let me put you in touch with Mrs X, who is a partner she could help on? Mrs Extend just shuts the door on the conversation obviously they would liaise with law enforcement. They're also responsible for records training. And I think also I would also stir into this netted responsibilities all of the thinking about the frauds and scams to which, of course, we are potentially subject. I would also argue that the ML CEO becomes the firm's Depok default point of contact for any money laundering queries, though I would argue that the money laundering reporting officers would arguably be the first point of contact. But if their offer absolutely busy or whatever, then it's to the ML CEO that the responsibilities might then lie because I'm sure I speak for most people who have any interest in attacking money laundering where it occurs, it is far better to speak out and to have us investigator matter, even if only to find it's all OK than to ignore it, sweep it under the carpet on. We get enmeshed in something that we shouldn't be involved in, and actually that is the message which is coming from the Treasury and Home Office in their second risk assessment off the national problem. Anyway, they say, those of us in the professional sectors, money laundering, compliance officers included. Oh, no broadly complicity, all negligent. Thanks. What they do suggest, though, is that we may be unwitting with the best will in the world. We're not asking the right questions of the right people at the right time. And if we get conned through, not having asked the questions, that's our fault. And what they're just to do is to move out of the unwitting category and into the vigilant category, which says that if we still get calmed, despite the fact that we've asked all of the right questions of all of the right people in all of the right times, then there but for the grace of God go any of us and we can be forgiven for making those mistakes. So it's far better to speak out and have it investigated. Matter how lonely you feel your role in the firm to bay than to press on ignorance. Now, by contrast, I just wanted Teoh reflect on who is the money on drink reporting officer. Now the n L R O. Is the traditional role that we're all comfortable with their the money laundry reporting officer. No, that's effectively their job role in function, but they're appointed as the nominated officer to give them their proper term under the proceeds of Crime Act 2000 and two and the money laundering regulations, or both of which require a nominated officer to be in place. Now this nominated officer, this reporting officer, the M L R O. Must be an individual. They must consent to their designation as a money laundering reporting officer on. They must be of sufficient seniority and responsibility to fulfill the role, whatever that is now come on to discuss it in just a moment. But they need a certain amount of clout and authority, but not necessarily off board of management level. Further thoughts about the nomination office, the money or drink reporting officer must be available at all times. If they're ill absent on holiday or for any other reason, a deputy must be put in place, and if they are removed or die, a replacement must be appointed fourth with, In other words, there must be somebody, somewhere all of the time who can fulfill the role off money laundering reporting officer. What is the role off the reporting officer? Well, it is ostensibly to receive reports off money laundry activity from the members of staff that is effectively their sole role and responsibility, but receiving reports from staff about money laundering activities only part of the parcel, of course. What most money ordering reporting officers should then do is they should consider the report the grounds for knowledge or suspicion of money laundering work out whether or not the staff up paranoid and worrying unnecessarily, or whether indeed, there is some real reason for suspicion and then, if appropriate, report the matter externally to the national Crime agency for answer. No reporting the matter to answer. I'll come onto in just a moment, but how we do it in a way that but that's effectively, what they do. They received reports internally, investigate and, if thought fit, report excellently to the National Crime Agency. Unless offensively, where the responsibility ends, however, thereafter they would need to be liaison with the National Crime Agency over whether or not a consent, whether or not they are going to give us a defense to a money laundering prosecution. Damrell, as they now call it, which we must actually ask for in the report, or are they going to refuse consent in which case we're probably going to need to liaise with the criminal investigation agencies. You may well want to look into our papers and records. However, I would amplify the role of the M El Oro slightly because I think this has been the practice with which the appointment has come in. Most firms I'm aware of. It's a case of being the firm's guide on expert, I suppose, on anything to do with money laundering queries the first point of contact. And as I hinted earlier when I was talking about the money ordering compliance officer, I think also the frauds and scams get swept up in the money laundering reporting officers role as this department lord, indeed firm expert in most of the larger firms, I would say that the money laundering reporting officer needs also to supervise his deputies or departmental champions that he has in each of the team's who can do the initial vetting before a matter is passed on to the FMLA row. I would also expect that smell a rose are obliged to provide an annual report to management on the function of the procedures and a couple of other thoughts I would expect also the money laundry reporting also to be the arbiter off legal professional privilege. Because it's a key question in this whole regime that before we report to the National Crime Agency, we need to decide whether or not the information conveyed to us or coming to our attention is covered by legal professional privilege, because if it is, we're not allowed to report it now. Confidentiality is a concept is overridden by the duties of the firm and ultimately the money laundering reporting officer to pass information on to the National Crime agency, as there are the ultimate police watchdog. But we have to before we pass that information on consider whether it's covered by legal professional privilege. And this is not an easy question to answer by any stretch of the imagination. But there are criminal X exemptions to the application of legal special privilege. If we are being asked to undertake a retainer which is effectively criminal, that is not a genuine retainer on all of the normal duties. Cease to apply on reporting would probably be perfectly OK, but there are some issues there about whether or not privilege attaches too much of the information which need to be resolved. The other thing, which the money laundering reporting officer I think should do is liaise with the training function because it suggests in the regulations that training should take place approximately every two years if no more frequently than that. But that one good way of spicing up the training is to discuss the reports which we've had over the past two years so the illustrations can be given to everybody else of the kinds of things which ought to be being picked up and spotted. The other broadening of the role, I think, is that we need obviously some liaise or with clients, and indeed of those as well. We need to think about who can say, walk to whom and when, particularly the clients, because indications in the shark case would suggest that the clients have a right to know what is going on. And if we shut the shop for a fortnight and don't talk to them on were wrong, they need an explanation as to why we started the normal timelines of the matter. Other thoughts. The money laundering reporting officers should also be receiving and retaining any money laundering records and paperwork for a least five years from the end of the relationship. And I would being trying to think that these things should be kept off the client file rather than on it for no other reason than we can defend ourselves against GDP are subject access requests should the need arise. We're keeping these for very good reason and 1/5 of the thought. I would also suggest the money laundry reporting officer answers to the firm's money laundering compliance officer if they are a different person. And we've just been discussing that role a little earlier. No, I just wanted to spend a few minutes just thinking about the specific duties in a little bit more detail because I would argue that the money laundering reporting officer on door compliance, officer one or the other or both, you know the idea is also the firm's expert, and historically, before we had a compliance officer, the money laundering reporting officer fulfilled this function. It wasn't part of the role, but it was. Nevertheless, it wasn't an official part of the role, but nevertheless it was work which they performed that they knew about the law. That policy is the procedures, the risk assessments to, I suppose they're also the fount of knowledge at the source of query about clients matters, the geography, the concerns, suspicions whether to report who can say what to whom. The backstop for our eight times enquiries the A's are with law enforcement records, training and the frauds and scams stuff as well. And I know I'm repeating myself, said that of the money laundering compliance officer. But they're frequently the same person anyway. But if they weren't then I think both characters need to have this residue off knowledge and information. You know what being time to think that the money laundering compliance officer would delegate a lot of this functionality to the money laundry reporting off that if they were different on the MLR? Oh, I think is the first point of contact for any money laundering queries. But A said a few moments ago, I think I would speak for anybody in this community when I say that it's far better to speak out. If in doubt, speak out far better than to ignore it, sweep it under the carpet, pretend it didn't happen and get caught up in something illegal now, as far as the key responsibilities of the Moro are concerned, the first and most obvious point is to be the recipient of what I would call on ice are and in the internal suspicious activity report. And the key duty is to receive reports from staff who may or may not think they've spotted something Now. I would say clearly it's the non contentious transactional staff. You have to have their wits about them in spots, stuff that they think is unusual on does not adequately explained. But I would also be making a similar point in relation to letting agents to, because I think it would be wrong for litigators to think they're exempt from this. If it's a fictitious litigation matter, that's a money laundering issue. Even if it wasn't fictitious. The fact that we come to know things about a litigation client that might affect us if we were later instructed on a non contentious matter I think he is something that the money laundering reporting officer as that colonel of information ought to know. So I think the general proposition is there should be a more frequent reporting of internal suspicious activity reports just for the firm's own record. Having said that, I think it is part of the process that the money laundering reporting officer should cross question the staff before simply accepting these various reports. Are the feelers just being paranoid in this case law to suggest that paranoia and speculation is not sufficient to trigger our proceeds of Crime Act duties the Court of Appeal of sent for some 10 years ago? Now that we need evidence of illegality before it is a trigger point for a report on that I think would be the line of inquiry. The money laundering reporting officers should be making of feeling is reporting stuff to them internally. What evidence have you got of any illegality? We also need to know what funds were talking about, what the transaction is, who the client is, who the suspect is, if different. There's a lot of information which the National Crime Agency will demand of the money laundering reporting officer if they are going to pass this information on. So I think it's part of the money. All grew appointments. The thought process is a report really necessary, because if the fielders are being paranoid, all thank you for the comment, but I'll just battered straight back to you. You can point to me every any evidence of illegality. Then I'll believe you. It's the difference between a concern which is not reportable on a genuine suspicion. Which is if, however, we do get some evidence of illegality from the field as they tell us what is going to happen and roughly when, so that we're in a position to report it. What's the M El Oro should be doing is investigating the clients that matter, that funds that place you, all of the bits which are concerning the fear there should just be vetted by the money laundering reporting officer is not simply a case of accepting reported passing it on, but it should be investigated, which requires a certain amount of authority in the money laundering reporting officer Andi Office Juniors, who, being given this role, I just don't think off that kind of clout to be able to make the demands of the FIRMAS to all the matter that just mentioned before deciding whether to press on. And I have already debated the point about legal professional privilege, but I think it is now the money laundering, reporting officers role to contemplate whether or not the information is privileged. Andi indeed, reportable at all. But then, if the decision is made that there is sufficient that merits a report, then obviously we need to furnish that online report to the National Crime Agency an unconscious, that the online reporting form is not as convivial as it might be and where it improved. It might encourage us in the legal profession to report more, which would go some way, I think, towards answering the concern and criticism of us that were actually reporting less unless as the years progress. And yet the volume of transactions that were conducting is increasing, and there's obviously a mismatch between the tube. So that's why we're being asked by the S r A. To explain ourselves. But the irregularities of the report would still nevertheless require us to provide all of the information that I've already mentioned the grounds for our suspicion, the steps that the firm wishes to take that might otherwise have being an offense under the Act Receipt of funds on the Section 3 to 9, a possession of funds doing of a deal under section 3 to 8 and then under section 3 to 7, transferring of funds. I think we need all of that information to because the S r. A. Have said that they will not grant permission to ah transaction or a client. They can and will only give consent to a step that might otherwise have bean an offence under the act, a step the might of the words of being an offense. We also need to know who the suspect is. The identity of the suspect also needs to be specified. The whereabouts of the funds involved, I would suggest also we need to include the timelines of the transaction and, if necessary, a request to answer as to what to say and to whom in that into rectum, between the reporting of the matter on being able to do anything, which would be up to seven working days later, seven working days later. It's effectively a fortnight when you take weekends and bank holidays out of the equation. The other thing which on DSO have been saying is you need actively to request a defense against money laundering, Damrell as they call it, that if you get that defense that is the appropriate consent to the doing of the act. Whatever it might have bean through, all of that information needs to be stirred up in the online report and all of that information needs therefore to be furnished to the mlr Oh, as part of the internal suspicious. Like the reporting process which the firm has in place, there was focus tipping office concern. Once we've reported all of this on that online, former were sat waiting for their permission. We also need to be very careful that we ensure that nobody inadvertently tips off the suspect. We must ensure that nobody communicates that the suspect has been reported to anybody anywhere in such a way that the effect of that disclosure is that the suspect is alerted to the fact that they've been spotted. So what should staff say to inquirers of the business? If it's quarter to 11 on a Monday morning and we become suspicious of the month of the money, we might report it to the National Crime Agency. Day to day one is tomorrow day 234 finds up to Friday than 567 the following week it's gonna be a week on Thursday before we could do anything and the agents ring up at 11 o'clock and ask us, Why haven't we exchanged already? I thought this was due to happen after 10 and some well meaning member of the support team says to the agent, So yes, where we've had some concerns, we've reported it and we're going to get an answer back on Wednesday, probably about two o'clock. So can I give you a ring Wednesday? Lunchtime? Yeah, find Click, and he will tell his client, who mention it to somebody who will pass. The message on it will end up alerting the suspect. The suspect disappears. That's a criminal offence by us, because our admittedly truthful and perfectly legitimate explanation has had the effect of tipping off the suspect wasn't our intention. It wasn't our motivation, but it's the effect of what was said to the agents on the fire. So I think we just need a protocol within the business as to what people can say on it. Just simply should read something like, I'm afraid I can't discuss the matter with you at the moment. You might add the prophecy of due to regulatory requirements I'm unable to discuss it with you at the moment, something of that nature. But I mean, I leave it to firms to decide what form of words they want to use. But But that is all we can say. And if the clients get really agitated, then problem in touch with the money laundering reporting officer. But just don't tell them that that's who they're put big put in touch with. But leave the Moro to say the exactly the same thing. It is the only safe way forward. It's not infallible. Of course it isn't. But it is, I think, the only way forward. No, of course, once we've reported the matter and shut up about it. The other point, I would argue, is that the MLR oh, also ought to be conducting some of the A's along with the answer office. Assuming there to be any, there may well not be any, in which case we just have to wait and then we can press on consent, having bean deemed to be given by their failure to stop it. But they may well contact us on, and we I would expect the money ordering reporting officer to be that the a zone point Once consent is granted, we can then delegate that response to the Fiona's. And as long as we do exactly what answer have instructed us to do, then we will be free of any prosecution under the principle provisions of the proceeds of Crime Act. But constantly, if the consent is declined, then this becomes a law enforcement problem and the police will probably contacting us. They will probably produce production orders for files and all that kind of stuff, in which case find we just got to go along with that, though obviously we still owe. Our clients are professional duties. We just need to make sure that the powers that are being exercised, or indeed genuine Onda legitimate. But all of that kind of stuff, I think it is necessary. I just simply mentioned the end of this line that this notion of ongoing monitoring I mean, this is the I think, the overarching key point about all this anyway. A love us ought to be constantly vigilant to the possibility of wrongdoing, and we ought to be picking these issues up whenever they emerge. You know, this is a culture. It's not an event. It's not something we do to climb to the start of a matter. It's a culture of constant vigilance. And I think that is true even after we've Bean granted permission to go ahead. Because I was discussing this just the other day with somebody and they would say, Oh, so we can actually do the deal, then? Yes, Yes, we can, even if it is a money laundering translation. Yes, they got bigger fish to fry it. They're not going to try to stop us on every instance. But clearly this is more dubious territory, and we need to be maintaining our ongoing obligations in response of it. Now, I was talking about liaison with the client as well. If the client is a suspect, then obviously I think the short simple point is there should be no liaison with them. But if the client our client is the innocent party, then I think there is every justification in joining them in the suspicious activity report that we're making because it's only the people who are named in the suspicious. Like your record will get the defense to the money laundering prosecution. And I would walked that for my clients, just as much as I wanted for me, so I would join them into the SAR. We say to them, Don't discuss it with anyone until we tell you on when we all get to go ahead or for deem to go ahead that we can all press on with it. But the other point that I have already mentioned. But I'll mention again because it's mentioned in this slide that the shark case, which now dates back to 20 10 indicates that clients should be told if they are the suspect. They should nevertheless be told why the firm had to halt matters on their behalf as soon as the risk of money laundering and tipping off has abated. Because, of course, it's also an endemic to what have being saying that we might be suspicious. We might be genuinely legitimately suspicious, but we could be wrong. And if we're wrong and we build their fortnight's delay into the clouds timelines, we could cost them fortunes. Now there's nothing they can do about it, but we owe them an explanation as to what bunk just down for that fortnight that we couldn't tell them about which is not gonna be a comfortable conversation by any means, just further thoughts, recordkeeping. I already mentioned that the money laundering reporting officer, I think, should be responsible for keeping all the money on drink records centrally. Elektronik Lee by all means for at least five years from the end of the client relationship. But I mentioned this as being an advantage from a G D. GDP, our point of view that we could defend data subject access requests because we're keeping this information for the purposes of crime detection, the detection of money on drinks, terrorist financing and fraud investigations and prevention. And I think those are perfectly adequate legal grounds to defend those subject access requests. And as far as training is concerned, I would suggest that all client facing staff anyway should be trained periodically in money laundering law. Which doesn't change a great deal. Admittedly, but the systems, the procedures, the risk assessments and so on, using past examples and SARS as illustrations on there's no stipulation there's two water how that training should be conducted or by whom it's entirely for the firm to decide. But it could well be an internal matter for the money or the reporting officer to take responsibility for for him to engage somebody like me to come in and just top his staff up every now again. But training is essential now. I just wanted to mention another matter which is not yet in force, and that is the so called superstar. The SARS regime, as it currently stands, is subject to scrutiny and comment and all the rest of it. And indeed the fat if mutual evaluation review was critical not of the regime with which were working, nor, indeed our professionalism with which we work the system. It's with the suspicious activity reporting regime on the national crime agencies, inability to deal with the number of reports that they get in a year. So one suggestion which finds its way into the regulations is Theseus, upper SAR, because currently everybody must independently decide whether to make our own report on dawn transaction on DSO gets a report from the solicitors on both sides. The accountants on both sides, the agents, the the um intermediaries. You know all kinds of people make a report to the natural cram it so they receive six or eight reports all about the same thing, and this is not the best way of capturing the fraudsters. And the idea behind the superstar is to enable the parties to discuss matters between themselves and then made one report to the National Crime Agency. But although this, I think, has a lot to commend it in principle, I think there are obvious defects with it in practice, and that's why it is not yet in force now the S. R. A's current approach. I just wanted Teoh summarize this briefly by way of conclusion that as of April in 2019 no matter when you're watching this. But as of April 2 90 under pressure from the National Crime Agency and opposite who were both concerned, the decreasing number of reports from the legal profession have pressurized the S r A. Into undertaking further investigations they've undertaken to investigations. They undertook a thematic investigation off 60 trust and Company service provided who law firms. Andi. That's thematic investigation has indicated some deficiency is in ah risk assessment are written risk of decisions or each clients and matter on our ability to perfect our ongoing monitoring duties. And of course, there are also some further enquiries as to whether enhanced CDD is being addressed properly and correctly by all the fear in us. The report on the law firms, which was published in May 2019 shows that most law firms are complying well, but there is still a lot more to do. And indeed, 26 off the 60 or rather 59 firms that were investigated have been referred to disciplinary teams. The main findings were that there wa sno written risk assessment across the whole firm. In 20 of those 60 cases, 1/3 of practitioners had not done a full, firm, wide risk assessment, at least not that they could point to. There were no written decisions on individual clients and individual matters in 14 off those 60 cases, there was inadequate customer due diligence checking in 14 of those 60 cases, and there were inadequate checks. Politically exposed person checks it again 14 of the 60 cases. I don't know whether they were the same 14 but it's still alarmingly high as a proportion. So on the back of that, the S r A have as off May 2019 at written to a further 400 firms to further assess their compliance approach, and that's currently being just stated upon. And it will ultimately lead to a second risk assessment by the S. All right. But in conclusion, I just wanted to say that there may well be no distinction in the firm's mind between the rolls off the money nor drink compliance, Officer. On the one hand, on the role of the money ordering, reporting officer on the other, who does what it is an irrelevant consideration. The same person occupies both roles, and it doesn't really matter who does what then. But in the bigger firms, I think there is a division. And of course, the division between the roles and responsibilities is, as I described it in this, uh, webinar. But the general questions which all of us need to be addressing particularly the money or in compliance officer, because it will be he or she carries responsibility for this. Is our risk assessments adequate? Are the firm's policies and procedures adequate and fit for purpose to use that hackneyed phrase? Is it all actually working the way we believe it to be? And is everybody in the business being as vigilant and a skeptical a Zaken Bay because if not, there may be some work to do. And I would also mention that terrorism sanctions peps frauds are also huge issues that need to be addressed. Andi properly and, of course, to acknowledge that the threats can be internal too. So we need eyes in the back of our heads as well as in the science in front. But if we've got all of that, if we're asking all of the right questions of all of the right people in all of the right times, we're fine on the rolls off. The money laundering reporting officer is the recipient of reports on the compliance officer is being the overarching head off money laundering compliance, I think should be safe. Thank you very much indeed for listening.
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