Written and recorded by Katie Jackson
Hello. My name's Kate Jackson on day. I'm here today to present you this weapon out on the new money laundering regulations. 2070. So today's webinar is really gonna be talking about the implications of the new money laundering regulations and thinking about some of the steps that you can take now as a firm to implement what's required of you. Under the new regulations, we should start by saying that this webinar is recorded in the summer of 2017 so at the moment, and joined, according while this. But when I was being recorded, we have seen the new money laundering regulations which came into balls on the 26th of June during 17. But what we haven't seen is the Legal Sector Affinity Group. Guidance on this is guidance that is published by the entire legal Sector Affinity group. Those are all the different regulators. The long Society as well as involved s away the caps blast. It's convinces Silex all of those individual regulators within their legal services sector coming together to write what they call a leap of sector affinity with guidance and that guidance is gonna be looked at unapproved by the Treasury and there's gonna be one set of guidance of food for the sector by the Treasury. It's mind standing that this garden this is underway is being drafted, but it might not be out for some time yet because of the way the Newman Laundry regulations have been bought into fours extremely quickly. So they consulted on in March, and then they came to forcing June, and we didn't really get much feedback discussion in that consultation because there's a general election. My incurred so very quick turn amount firms, you know, they regulations themselves were late before Parliament four days before before implementation. So extremely quick turnaround. Are firms really are in the situation now where they're having to look at their money, laundry regulations themselves that starts intimates and quite quick decisions about how to implement those? Well, yes, are a have said, is that they're not going to prosecuting unless they're adopting your truly cavalier approach to their money laundering compliance on by and large. If you're working, it's Walter meetings. My spoon. You're not going to see a great deal of difference between your money regulations in the name of regulations. This is not a root and branch reform. It really is putting more onus of risk assessments on on making sure the firm's well run on those of the important points to take away from stays. Weapon on on the important points for you to think about when you're attendings into practice in your own firms. That's really where the emphasis is is really much more now around saying, actually, as a firm halfway from a management perspective, always satisfied that things are being done correctly. So as a result of that, what we're going to do today is talk through some of the main points in the new money laundering regulations. We're going to have a think about some of those implications for you and your firm on and one of those the main things that comes out. This is to make sure that your firm has a risk assessment in place, and there's a sample risk assessment with this now as well, which is suitable for a large or small firm, although possibly slightly more for a large a larger firm. You could simple life. If you have a a small firm, so what? I want to do it take you see the main highlights for like the new money 100 regulations and how I like to use some of those areas that you need to be a well, what needs to be done irrespective of those points. What this webinar is not covering is anything relating to money laundering. Vince's So Poch o, for example, that Proceeds of Crime Act we're not looking at terrorism acts were not looking out reporting to the There are separate webinars on those subjects, which are available through data, nor which you can a cap in respect of those. It's not something that I'm going to be covering in this Webinar today were purely and simply going to be looking at the main highlights off by the money laundering regulations 2017. But in doing so, it's important to say that at this moment in time, legal sector affinity guidance has not been published. So if your viewings we've been are you thinking what I want to get ahead of the game? I want to get more risk assessments, don't know what to move forward, don't want to learn and understand what people are thinking in the sector about the Newman want your regulations, and that's great. If you're think to yourself that you need to understand what the guidance is gonna be. The legal sector affinity, Griebel, how this is going forward. We will know in a position to tough at the moment, nobody has that. Really. Firms are finding their own way a little bit whilst they're waiting for that once the weight of that going to school. So let's ever think about some of the things that are in those money laundering regulations on what they're actually saying in respect of what your infirm should be doing. Well, the first thing to be aware off is that really, as I've said before, it is much more around the management of the firm. So the technical day to day stuff that your stuff will be doing, there's not that much difference of awesome. Um, you know, there was some clarification of some of the things that they expect, but these are your in a woven firm that just a lot of this stuff already, which a lot of firms are thinking about certain things. Geographical risks, for example, their clients, whether their clients, politically exposed persons, any of those things, that is all really important if you're already thinking in those terms that these things are really going to make be dotting the I's and crossing the tease. If you'd like to make sure that you've got things right, so but there are important shift, and there really is a shift in regulations overall to say that this is, you know, much more of a management function. These are managerial functions as to, you know, it's important on it. Vote firmly. Three trains within her the money religion regulations very firmly putting those requirements onto the manager of the FAM and making sure that the managers of firm now we understand how money laundering are ultimately margin is being tackled within the individual from. So let's have a look at some of the key areas. So under 19 1 of the regulations. It says that a relevant person so firm must have appropriate policies, controls and procedures on regularly review them, update them on. Keep those keep that documentation available on those policies and procedures must include risk management practices. So if you're doing to a set risking what does that look like within your firm? How is that being communicated out stuff any internal control, so risk mitigation that you might have in place in order to deal with things. So, for example, you got taking clients from a another geographical only that's high risk. How are you managing that situation? How you ensuring that getting those I D documents? And how is that working? Do you have reporting forms internally, Dean with suspicious activity? Have you evaluated how their work, what internal controls you have to mitigate the risk to your firm's off money? You must have customer due diligence prices. And so all of your firm must understand in all of the staff in the firmest understand what customer due diligence is on the importance of that. Now most people do. I do a lot of these training sessions when I stand up, and I say Gene or ceding dears, people just looking blankly. But if I say to them what you have to do when you open a file, well, everybody knows that you have to get the driver license of hospital, those kinds of things they all understand and know that that's there. But they may not necessarily know that that's customer due diligence and the reason why we do on the important thing. To think about their ease and just be aware off is to say that source of funds is also really important in relation to that. So your stuff need to be aware and trained thinking about the individual as a whole going back to the previous. You know, the old ideas have no your client were important to think about customer due diligence is a whole due diligence on that person. What do we know about that person in the ground? Just that story. Make sense, tres. We also have to have a make sure you thought about Reliance are we're allowing one of the people to do our I D jack informers, particularly as the trend is now. If you're offering remote services, how are you going about that? How do you have appropriate record keeping policies in place? So, are you dealing with things? Um, and then making a put it back in two days, for example, is your money laundering reporting keeping records of the decisions that they've made our your staff keeping records on their files of how they thought about things and what decisions they made in respect of those things and then systems for monitoring on compliance wears an internal communication off policies and procedures. So thinking about are people actually complying with those policies and procedures? And do you have systems in place for that? Well, most commonly in a lot of North firms that's gonna come out for your father of your system. So I simply going through and checking that to make sure it's open and then what they want in order regulations go on to say, is that this must include the ability to deal with and identify situations, which are unusually complex transactions, which have no economic or legal purpose. Where there's an unusual pattern of transactions where there's anonymity, if there's any new technology involved and where there's a suspicion of money laundering or terrorist vitals, so all of those things need to be thought about and considered in the road. We need to be out to evidence within our policies and procedures that those things are specifically tackled and dealt with. So if you've got your money laundering policy procedure in place of moments, you're equating that money laundering policy procedure. Go back and have a look at that and say, have we thought about all of these different things. Can we say that we have identified? And this is why says in the money laundering regulations Number one situations, which are unusually transactions, which have no economical legal purpose where there's an unusual pattern of transaction. But there's any other member. T where there's any new technology were right. There's a suspicion of money laundering or terrorist ones. Are you dealing with all of those things? Are you thinking about all of those things and how you would deal with them in your money laundering policies, procedures? And has that been communicated out with all your stuff picking over? So it's about pulling those extra things on. I'm really the money launch of regulations are identifying those things as being key with ski areas, and they're saying we want in tough policies and procedures in place to deal with them. So my first recommendation of my first step, if you're thinking about how to do this within your firm, is to say, actually, this is what we want to do, and this is how we're going to do. Though I have a look at that money laundering policy procedure, you've got the notes that complete this course that go through that have I think about making sure that within your policy procedure, then since have been talking to double. It's important to know that if your firm is a large Berman, if you go subsidiaries outside the UK, then it's important to know that they also have compliance requirements as well. I'm not gonna win through those in lots of detail, because that's a very specific question, but they are set out a number 20. Regulation 20 of the money laundering regulations. 2017 When we're thinking about internal controls, it's important to say that there were two two appointments that can be made now within for in relation to money Children. So previously had your money laundering reporting up. So you modified deputy money laundering reporting, not money laundering, forcing office. It could have been anybody. It could have been some leave relatively junior on. That sometimes presents a problem because I've seen situations before where firms have had partners doing it, but they have been a partner in a very remote office and not have that contact, support and supervision of what's going on in the other offices and there's sometimes an element of giving it to somebody, it being seen as not a desirable thing to have to do to be coming money, larger reporting officer, not something that people want to touch necessarily. So there is an element of that. It is important to say that money laundering regulations from 70 I do make it requirement that there must be somebody at the very highest level who's responsible for money laundering clients. So that's why I got bored level or management committee. You have to appoint somebody at that level that that must be somebody who sits on the highest level of management committee and as that, governance, oversight. But money, dungeon, that responsibility. So it's important to think about in your firm. Do you have? Do you have somebody? Maybe not just somebody who's apart? Maybe he's somebody who's sitting on that management committee on the board to say, Actually, do we have enough? They are we governance wise? Do we need to make somebody else? Was once war, provide Britain better breath responsibility across in order to get that money launching blinds so important to start thinking about that process now and put that in place to make sure you've got somebody seeing you. The other important thing to note is that that person doesn't have to do the day to day. You can still have a nominated officer who is at a lower level who will tackle those things on that individual person is somebody that's gonna have toe have clout within the office. Even this is, in my opinion, doesn't say that regulations. But really, in my opinion, they have to have clout. They have to be able to demonstrate that leadership. They have to be able to demonstrate that visibility across the offices in order to send that they do drop effectively. So those two people don't have to be the same. You don't just have to have warm money laundering reporting, officer. You can now have somebody at senior level and then have a nominated officer as well. The other thing to know about this is that you have to notify the S L. A. And so these appointments have to be approved. And also yes, I we're going to approve all management in relation to this in relation to money laundering as well. On this is again part of money laundering regulations 2017 so that yes. So we haven't yet revealed what they, uh, timescale is for this and what the process is for this. Then they're saying they're not in a position but their money. Laundry regulations set out They need to be done before June next year. So they've got a year in to put in place that process for approving everybody in all of those rooms across the country to deal with money laundering. So important for you to take those steps now to think on every thinking about next steps that are always in from its Do you have those people in place at the moment? Can you put those people in place? So somebody board level on potentially somebody at a lower level? Who's going to be that nominated person who can carry those things for you on a dented eight races if you are in a situation where you're changing that person? But once this authorization and Scott into place, then the regulator would need to be informed within 14 days of the of a new appointment. So what you going to an authorization process and looking to change it? Regulations say that the things being formed within 14 days. The other thing that's part of the internal controls that money laundering regulations look out is to say that you can dependent on the nature and size of the business. So when they say the nature, they mean the oval risk if you're running a small business, but there's a lot to risk it touch money laundering. You might well think about this again. A large business really should be thinking about this. And I think there's so many before Biala Kita just to think about to say, um, you know, having an independent or edit function, somebody to go in on independently assess whether the adequacy of the procedures to comment on the adequacy of the procedures and how they're being fulfilled. So is there anybody that you can bring in from the outside to have a look at what you're doing to say it? Suspend incorrectly? Is there any areas that we can prove it? What do you think on bench markers? A rebel against that, so important to say that that's within the regulations, you would have to be you in a large for you'd have to be strongly trying to justify not having to think so again. If you're thinking about next steps advising from the regulations, this is another area that I would be looking to tackle eso. We've had an assessment of the overall policies and procedures with then hunt, um, thinking about bringing into foolsday. Uh, I'm bringing cross all those risks into your policies and procedures we've had thinking about, you know, making sure you put the right people in place on the light posts in place. And then now we're moving on to thinking about Do you need an independent board of future? So again, you know, these are all management tasks really that need to be carried out as a result of the new at money laundering regulations. So that's how I think about what else money laundering regulations talk about. The next thing that's important to talk about is risk assessments, Andi said at the beginning, that is really important for you to be thinking about the firm where they were dealing with the risk assessments in the right way. Money laundering regulations require you to think about the only risk assessment on an individual level. So when you're taking on the new matter. I also think about risk assessment on the phone wide level to make sure that you truly understand and know where the risk your business are respected. Money, Laundry What we don't in respect of this webinar is produced a sample risk assessment, which you can see at the end of your notes. That goes into detail, and you can do this on the department by department basis. So you're thinking about overall, where the key risk ends. If you have a look at that risk assessment, it goes through in each area in each category. What the money did you make? Connections were calling me to do so. It requires money laundering regulations requiring you to think about information when conducting in risk assessment requires you to think about information made available to you by the supervisory authority. So your case, possibly their survey or maybe the secrecy. It also requires you to think about risk factors relating to customers, countries or geographic areas for apps or services transactions on delivery. All of those things need to be brought about and taking into account now what we've done in their draft risk assessment, there is categories those things for you and then broken those things down. So in some respects, a laundry regulations is more specific. Insulin's. It does say that these things are, for example, customer risk. These things, all geographic risk when we've tried to put those into categories alongside them. So let's have a look at that risk assessment on the draft risk assessment for using it well done. So, for example, it says customer type any clients or client groups who might present with unusual sets of circumstances any clients or weaves appliance in highways. Jurisdictions Any clients with groups of clients who are vehicles for holding a personal assets? See, Do you have anybody if you have any groups of plants of fall into any of these categories, and if so, you need to think about and do an individual risk assessment in relation to those. So what you got there on that table is, you know, department white. You might say, for example, that something car conveyancing department. What's the risk factor there? This information made available by the S away and say you'll see so you can have a look at that at that point in time, feel that what does that relate to your individual firm? Does it apply to your individual firms? So then you put details there? Yes, this information Barcelo Individual for what you impact's force a hammock. Two billion practice they're going to have. What's the likelihood of this occurring? What's your over with school? And therefore, what's your best mitigations? What controls are you going to put in place? So if there is information that comes out from there is a way of the CNC, do you think is relevant? Your firm weaken Vita in further details as to what they said. Yes, this has been to offer will assess the risk, and we'll put in place and controls. You might tell people advantage might include any policies and procedures. You might just don't reforms to take account of what s going on sale soon said. In respect to the customer time, any clients or groups, unusual circumstances, any kinds of groups of clients in high with jurisdiction. So if you deal with a lot of clients from a disease, for example, do they fall within highways? Jurisdictions and if so, does this present with your firm? Why, and you can fill in that firm was capped. Agree there to say yes, we do deal with clients from harmless jurisdictions. What's the impact of that? What would be the impact of that when we're talking about impact school, then what we mean by that is what's the impact? If if it went wrong on a scale of 1 to 10 how dramatic critically was the most money laundering? Things are gonna be quite high that scaled friends with you on What's that likely the probability that that situation could go wrong for us. And again, that's that You have to only individual assessment as to how serious is in case when you multiply impact. By probability, you get an overall, which sport, and that's what should go in that category there. And then the final column is we're thinking about your risk mitigation, and that's thinking about um saying to yourselves, Okay, this is the risk mitigation that we're going to put in places of. So, for example, if you're dealing with people from high risk jurisdictions, you might actually know, uh, you know, the local sinister based in that time his jurisdiction that is qualified to the same standard, um, as yourselves, it might be had somebody's qualified in England Wells. But conduct conducts, for example, the client due diligence for you and help you get around and manage some of those requirements. So if that's the case, you might be quite confident in how your firm is dealing with managing those this from Jarvis Jones six. And that could go down. Is your risk mitigation thes the steps were taken, but we do keep under review Think symptoms. So it's very much about saying to yourself there how, um how we as a firm thinking about our risk, how in mitigating others on what we've done with this form is going through and look all of those risk that set out by the Georgian regulations and put them in so that there will populated in within that form? And so you're covering everything the money laundering regulations requires you to cover. Now the ball is quite low, but it's one of those things where you could use it as an overarching form if you just got small for if he won't wanted to put out some of those things and make it a bit simpler on, that would be suitable for you. is a small firm as well, but just really thinking about for the larger forms. I would definitely try to incorporate some of that wording into your overall to risk assessments. The form that we've designed there at the end is an optional form. It's not part of money laundering regulations. It's something that way have come up with to assist you what they wording in the regulations when you're talking about risk assessments. The wording in the regulations ISAS follows 18 1 a relevant person was take appropriate steps to identify and assess device of money laundering and terrorist financing to which its businesses subject. In carrying out the risk assessment under Paragraph one, a relevant person must take into account information made available to them by the supervision authority and deregulation 79 47. That's what we talked about so anything that he s away publishes from time to time to say that this is a particular risk and then secondly, risk factors, including factors went into its customers. The countries of geographic areas in which operates products or services transactions on the delivery channels in deciding what steps are appropriate under paragraph one development person was taken to account the size and nature of the business. A relevant person was keeping up to date record in part of all the steps he's taken in the power of one. Unless the super visual Formenty notifies, inviting that such record is not with glass and then so you have to have thought about not maintained a record of written echoes of your of your risk and really the table we've designed those designed to assist without, But it is very much suitable for the larger. A super busy authority may not give notification. Virgin over four, unless it consists, considers that the risk of money laundering and terrorist financing records and sector was developing. Personal rates are clear in a distant so that, yes, away is not gonna come along and give you an exemption. This is only full completing this risk assessment unless on pit thinks that the, you know the development risks are very clear and very interested. But I think in most cases, for most rooms, that's not going to be the case. There's a lot of complex Stephen forging a lot complexity around money laundering. A lot of people trying high things got so quite complex situations. It's highly unlikely that Islam against giveaway voluminous eso and it also goes on to, say, a relevant person. So that being the firm must provide the risk assessment as prepared in paragraph 13 information on which that risk assessment was based and any record required to be kept under proper form to the super busy authority on the cost. So again, you have to keep up my cold, and you have to make it available to the S L. A or the secrecy when it's requested. Now this pap, the template the brief prepared is dot necessarily what they're some way will prescribe in due course. We're waiting for that legal sex, having to greet guidance. It's not something that can weaken. Act on. It won't. So this really is just something to get you started. It's an option for you you might want to use, and it just take account off the wording on the various different risks that are identified within her money laundering regulations. So again, now, taking that further, we thought about those steps. So to recap, we thought about on individuals making sure but you by individuals imposed with thought about policies and procedures we thought about conducting you risk assessment on were saying now actually got that template for you. Do you want to go and put that into into action? It's important to say and just moving on away from risk assessments. It's important to say that all of your firm should have, um, training in place on your stuff should be being trained. When I was at the council license conveyances, we used to say that people should be trained every genius, and that was kind of like the minimum standard, and that applies to everybody in the form. If it's your receptionist who's taking idea on the front desk, they need to understand the purpose of taking the idea what they're looking for when they're taking idea why they're doing that. If they should be looking for anything suspicious about somebody who's coming in, what kinds of things should they be looking for? How does that work? They need to have that understanding. Somebody who's a the owner needs to be looked like a transaction that a bit more carefully. Maybe they're assessing source of finances. It's coming in today. Know what to look before are they aware of the hallmarks of money laundering on what that might look like. So those those factors in place there was. Well, when we're talking about, I'm thinking about anything more than that. In terms of money laundering, you're thinking about perhaps having money laundering 40 offices. Object is in place, and they need to have a more senior amount of training. They need to be trained to an expert level. So for them going forward, it's really, you know, making sure that they've got much. Any place that they got. The right level of detail is in there. So the money laundering regulations 2017 do say that you have to, you know, train your stuff and you have to keep a record inviting the training that they receive. It's a It's a good practice to ensure that your training your stuff appropriately embolden to the level that that that they're individually wrapped. In addition to that, I would also recommend that you're not just using the same training CD again and again, again make sure he's stuff getting out there and understanding different tsunamis. I'm not that training and feedback is part of Janie doesn't necessarily have to be necessarily watching a video or home city. We delivered in a variety of different ways by using scenarios to train yourself, perhaps that you've seen in turn, Or perhaps that you've seen externally. And how would they feel about that? Training can take lots of different forms. The new money launch imaginations tend to 70. Create the's obligation, but they also create new offenses for failing to comply with the regulations. So if you're in a management off the firm on your not compliant, so you're not training of stuff on a regular basis with simple, you could face a summary conviction on or a fine of up to three months. Further new offenses created by the money laundering regulations, which makes it extremely important to ensure that your compliance with those. So let's think now about due diligence. Well, the requirements were due. Diligence haven't changed dramatically. You're still during your due diligence in the same way, Uh, uh, set out regulations 27 28 not look very similar to the previous regulations, and I should be in to take him when establishing a business relationship on occasional transaction. The threshold amount is lowered now to 10,000 euros and it was 50,000 euros on If a transaction is a book that finally, after intake due diligence where you suspect or doubt the information provided or you suspect something is going on, you shouldn't take further checks. If you do suspect money laundering, you will need to make a report. Risk assessments and due diligence should be reapplied of risks change. So the situation changes. You might need to do more due diligence in order to compensate for that situation. What, uh, they also require you to do is to think about identity and require you to think about information on the business relationship, all situation as a whole, that all the intended commercial transaction. Now what I'm doing this public, uh, put into your notes there, publish the detail off what actually says around commercial clients. Because this is a question that I get asked a lot. What is the idea comments for commercial clients. So I'm not going to take you through all these things in detail now, but you can see what the specific requirements are that just have a double check and make sure that those within your vessel understanding that I make sure that it's staged and correct within your policies and procedures. The timing of gratification The wording has slightly changed, so there is an issue now where you have to say, Actually, we need to do this before the business relationship is established. I'm There is a suggestion within the money laundering regulations that it can be done. Assume it's possible they're after. But to do this they must be very little risk of money laundering. They do, however, making exemption and appear to understand the urgency of some legal transactions that might take place. What it says. A. When an independent, legal, professional or other professional adviser is in the course of ascertaining the legal position from blocked or performing the task of defending representing that talented or concerning legal proceedings, including giving your bus within situation, institution well, avoidance and those proceedings, then that requirement just not applying the same way. You have to cease a transaction where you're unable to carry out customer due diligence in hands to diligence needs to be carried out in certain circumstances. There are more specific requirements in thes regulations than there were released. Regulations were late into in hamster diligence thes include, Let's suppose this situations, which is what we've put in the risks. So what? What it says there are. We'd relevant section stream, form the money laundering regulations, and these are listed in your notes. A relevant person must imply applying how disgusting due diligence measures and enhance been going one between, in addition to the customer due diligence measures required and regulation to inject your standard ones one, if applicable, regulations with tonight to manage and mitigate the rest. Devising in any case identified is one of those homes good money laundering in any situation identified in your own risk assessments of where you conducted that risk assessment. You've identified that this client group of clients presents highways from religion. Are you going to do something about information made available to the firm as a result of super busy body, a business relationship or transaction with somebody in a high wits country in relation to correspondent relationships with a credit institution or financing institution? If a relevant person has determined that customer oh potential customer is a peck or family members and associates of a pet, in any case where the relevant person discovers that customers provided false or stolen identification documentation or information on the relevant person proposes to continue to deal with that customer. In any case where a transaction is complex and unusually large, or there's an unusual pattern of transactions. The transaction or transactions have a no apparent legal or economic purpose in any other case, which by its nature could present High was laundry. Now that wording is quite vague. If you do you think that there are situations which you have come across within the business, which are on high with laundry because of the situations that you see, you might want to then say in future we will always ask for 100 student Agence in these type of cases. What they also going to say is that, uh, when you're thinking about whether the transaction is unusually complex, unusually large, or the transactions or transactions have no economic purpose. But it says is as far as reasonably possible, examining the background of purpose of the transaction on increasing the degree and nature of monitoring the business relationship in which the transaction is made to determine whether that transaction or the relationship appeared to be suspicious.
00:35:00
Written and recorded by Katie Jackson
So when you're doing your enhanced due diligence, it's about seeking additional, independent, reliable sources to verify information provided or made available to us business. So it's about asking for that additional information in the same way that always walls what their state is. Also taking additional measures to understand better the background ownership of financial situation of the customer on any of the qualities to the transaction. Eso If somebody else is providing funds for transaction, you need to have probably understand with those winds come from on. Look at this. Also, friends with out into regions well, taking further steps we satisfy. The transaction is consistent with purpose and intended nature of the business relationship, increasing the monitoring of the business relationship, including greater scrutiny of transactions. What they then go on to say is you need to think about and be aware off the customer risk factors that are out there as well, including whether the business relationship is conducted in unusual circumstances. Whether the customer is a resident in a geographical area follow risk if the customer is a legal person, four has a legal arrangement that is a vehicle for holding personal assets. If the customer is a company that has nominee shares and bear fall withing. There's any customer that has a business, which is cash intensive, so these are, you know, really specific situations that they're identifying that you should be a well now. These always known before as being always can use for money laundering. However, it's something that now firms are having to think about him. You know, very specific detail. There is a list on these are listed situations. No one can argue that you have to do these things because they're now in the money laundering regulations. With this is the level of detail that we have put into on thought about a the risk assessment we provided. So one of the other ones is corporate structure of the customers, unusual or excessively complex, given the nature of the customer's business, and then whether there's any involvement of private banking, whether there's any issues of anonymity, whether there's non face to face business relationships, whether you're dealing with a known or unassociated third foot. But a third party soy, whether there's new business products and new business practices or there's any developing technologies, there's a particular concern, and you're watching when you launch a risk assessment this country about new developing technological currencies on how that those air going to work in the future, for example, whether the service or involves the provision of nominee directors, nominee shareholders or shadow directors, or the formation of companies in the third country on then it goes on. Haven't think about the geographical risk factors. And again, these are all things that we've put into the overarching risk assessment to be drawn on. That's things to do with countries identified ing credible sources such as mutual evaluations, assessment reports, um, as not having effective systems to counter money launching. So there's the Financial Action Task Force. For example, there's Transparency International. Both of those produced information on reports of round whether somebody is effectively and is able to have those affected systems in place to come back. Money mongering um, countries identified by credible sources of in significant levels of corruption on again Transparency International. That's the corruption index there that they have a country subject to sanctions. Countries providing funding will support for terrorism. So on this is what goes down at the bottom There. There is further information if you're having a your notes, it says. Countries identified by credible sources such as evaluations, detailed assessment reports. All published, followed reports published by the Financial Action Task Falls, the International Monetary Fund, the World Bank, the Organization for Economic Cooperation. Those are the organization's I'm thinking about those kinds of organizations they do publish information, do make information available. It's all about saying, if you're a small practice, that this is relevant to the size and night to review of business, generally speaking and if you want a public critic, Transparency International Provision list of countries A corruption index that's available once every year on the financial action test scores generally update their risk assessment wants 1/4. So if you'll have somebody within your firm who perhaps has a look of these countries and updates them if you are dealing with countries which might be a reasonable money laundering if you're dealing with countries, sometimes these could be war torn countries, for example, or countries where there's not necessarily the governance systems in place. These are the ones that tend to appear on the lists, so these are the ones that may, you know I want you within your risk assessment is I? Actually we need to be paying close attention. If all of your customers come from the UK and we're within a 30 mile geographical radius of your practice, then you don't necessarily have to worry about this as much. So let's move on then, to talking about Peps. There are changes to the pet regime and that Pepsi, no domestic Pips as well as foreign nationals and that never used to be the case. So you need to be thinking about if somebody is politically exposed. Person. What does that look like within the UK? Is one was overseas? There is a definition, and that's hopefully provided within no within. Not that says heads of state heads of government ministers, deputy assistant ministers, members of Parliament or similar legislative bodies. Members of governing bodies and political parties, members of Supreme Courts, constitutional courts members. Of course, war deters off the boards of central banks on busters, uh, high ranking officers in the armed forces, members of the administrative management or supervisory bodies of state owned enterprises director stepped directors of members of the board, often international organization on. Then it says at the bottom there the purpose of deciding whether the person is unknown close associate of a politically exposed person, irrelevant person need only tough regard to information which is in his possession, or two credible information which is publicly available. This final requirement is is very helpful because I get asked a lot, you know, a lot of people always concerned. How far do I have to go to establish whether because being Pepper family member of a pet well known close associate of the pet is an enormously wide category eso how far people actually have to go when they're looking at this and when they're dealing with it so actually is important to be ableto identify that to say that to people to say that you don't have to go to the degree it's only the information that is publicly available that you have to say that somebody is a family mother of a pet. If you're concerned that somebody might be a pet bull from remember pet, you can ask them you can go to them, give them that list that so they're within your notes and say, Are you one of these people? Do you have any of those things and be aware that pep status can last after the end of the last position as well. So just because somebody has finished in a position does not mean that they're not happening longer. So let's move on to talking about simplified due diligence. Tim provide. Due diligence is no longer automatic. So if you're in a firm that has been doing a lot of work, for example, local authorities and relying on a simplified due diligence, that's no longer something that you could necessarily learn. And you need to do a detailed risk assessment before using simplified due diligence. Now I'm not includes information provided to as the firm's risk assessment provided by the regulator. I'm thinking about the risk factors set out in the money laundering regulations themselves, which we talked about it with when, if you are thinking about applying simplified, you didn't agency Dona Risk assessment. You think it's buying, then you should be thinking about ongoing monitoring during that process. Do you need to any point us for that further information? Has anything changed within this relationship when it makeup unusual that you need to identify no. So thinking about simplified detentions is no longer automatic. That risk assessment doesn't to be in place. There are a new requirements around Elektronik money on and they what they're saying around those things is that this really still is a developing area. Payment instruments can be used without your diligence if they are below 250 euros or 500 euros in UK Reliance provisions, generally speaking, are still the same. You must consider reliance. If you're placing reliance on somebody else, have to think about whether the regulated to a similar sometimes you on also whether they're in a jurisdiction of equivalence as well. You. If you do place reliance on somebody you know you somebody else will Reliance new remain liable for that? So it's important to think about other trustworthy. What evidence do you have that going to be able to do what they say there? If you're using a firm regulator, parents were lords for them to, you know, do your due diligence for you this important check out. I think what it is that they're doing. Rachel, you're happy with up to that standard. So let's think about think about what you, um, I need to do as a firm. If you think about implementing the new money, laundry regulations within your business and what you need to think about being well. So the important thing, really. And the key thing that we've identified in this webinar is thinking about your risk assessment and certainly for most s are regulated firms. That's gonna be really king on a really key change. COC regulated firms less so. Lots of CLC regulated firms have already got one overarching risk assessment in place and for certainly for the small ones, that's going to continue to be appropriate. It's important for you to think about within the money laundering regulations and make sure you're doing appropriately the sample that we have given their takes, all of those individual risk factors that are identified in the money laundering regulations and puts them across department by department when you can. Then look overall, I watch me within the business and say, Where do our risks lie while the key things that we can pull out of that to say? These are the areas that we should be focusing on, and these are the areas we should be training. Our stuff in these areas is important also, then to think about your risk assessment of individual clients That risk assessment on those individual risk factors are identified in client due diligence. Eso. If you're thinking about individuals in high risk jurisdictions, for example, you need to be making sure that that's part of plants. Um, of the risk assessment. Your do more people are coming in through a different door, so really taking the time to make sure that your policies and procedures are up to date, that they take cattle. Today's things that we mentioned at the very beginning making sure the donor risk assessment and taking the time to go around the business, I made sure that's been completed. Yes, I have a right to ask that inviting if they need on then thinking about making sure that you have trained everybody, huh? You know, make sure that once you've completed that risk assessment, you're going around saying to everybody this is a risk assessment that we've done. This is what highlights for how we should be training you for how we should be dealing with this situation. Going forward on These are the areas that we need you to focus on on that training as I've said can focus on lots of different areas. If you've got subsidiaries and other countries, you might need to think about how they operate, how they deal with money laundering regulations. We talked about Peps as well, making sure you've got your definition of peps, right? And that you understand that your stuff understand that they're now domestic as well as foreign nationals as well on how to deal with those. A lot of people obviously have the pep searches come up assed part of their evil of occasions that if you're not sure, do you know how to deal with that situation on what does that look like? You would your stuff? No. How do you deal with and identify AH, high risk situation for money laundering such as, for example, if they were asked to deal with some unusual circumstances, or if they were asked to offer pavement, for example, in Elektronik Going sing. We just stuff know and understand how to deal with that. If you're a compliance manager, for example, in a large firm, you might be thinking to yourself, while I need to provide some information to the senior managers about yes and you would be right. I think it's important to highlight to them that they have new responsibilities under the money laundering regulations to ensure that their authorized by there some way to ensure that they are compliant with the money. Laundry regulations on that, importantly, as we've said near criminal offenses have been implementing is part of these money margin regulations. If people don't buy when they can be subject to a fine or summary conviction or both eso, it's important to take that step to say to people. Actually, you know, you need to be aware of this and then to be thinking about making sure you've appointed the relevant people. We talked about this at the at the very beginning as well. So those steps there are in place to sigh. Have we got somebody at the board level that come argue that case that can put across the case at the highest level? Onda take responsibility at that strategic level of enduring things have done on and providing that leadership, uh, in the firm providing that point to say, actually do take the singers. They got some date, the highest level appointed, dealing with this eso at that over arching level. And then you've got somebody, perhaps, was during the day today work. He becomes a nominated officer, somebody who's there. But it avoids that thing of somebody appointing somebody who's relatively junior to take on the wall or nominated officer. When that person doesn't necessarily have the clout or decision making parallel, you know, where did you get the relevant things done that need to be done? So those are the important next steps? I think if we just have a look at that risk assessment that we identified that we put into place, you'll see within that risk assessment that we've. I didn't used a lot of those risk factors, as we've said eso customer type, for example, any customers or groups Christmas with product involves private banking geographic ends, Um, anything about mutual evaluations or detailed assessment reports taking business from areas which are have significant levels of corruption or whether criminal activity, any instances of taking business of country subject to sanctions. Uh, anything where anybody has been, uh, and has proven to be supporting terrorism now, then, if you go, uh down it then says products and services, and we've kept by some of things into products and services. I gain from within the text of the money, lords and regulations, any product or service where payments, what we received from unknown organization to third parties, any new products and new business practices involving the use of developing new technologies. Or where there's customers or groups of Christmas, where the service involves the provision of nominee directors, nominee shareholders or shadowed elected. So if you're involved in dealing with nominee directors in respect of complete, there needs to be particular risk assessments involved in relation to dealing with that. What we've said for transactions is transactions with concern or patterns of transactions, which, you know, identify additional risks. Do you have any of those? Well, it's important to say now if the answer to that question is, no, I would on if you're in a larger firm. So, for example, if you're turning over more than, say, 250,000 I would be questioning to say to you, Well, are you keeping records off, making sure that you're dealing with money laundering effectively. The reports you're making are you doing those effectively on? Are you keeping records of the enquiries that you're getting internally to identify whether there are any patterns of transactions, the U. S. A firmer coming across that you need to do with. And that's the important thing to think about when you do with this is, yes, all of these things in the money laundering regulations. But is there anything after you know about your firm? But there's a particular risk area for your friend has been identified. And if you're still answering no to that question, make sure that you will be visiting those reports on making a basis. Are they telling you anything about what's happening with your customers? Is their customers from particular area that's causing a particular problem? Are their customers behaving in certain ways that you think actually was seen this time and time again here has caused definition. We do need to highlight it, a monitor that so that might then go into your risk assessment. If you're not gathering that data, now's a good time to start gathering. You have a look back and say, Well, actually, my money laundering reports come have committed to me of all, said X Y, and said it's a really useful tool to make sure that you're doing that risk assessment and you're gathering that entering rule and then the final factors. There are delivery generals. Customers are grouped to customers where the product transaction is one that might favour activity for customers of groups of customers where the situation involved non face to face business relationship. So again, where you're saying the delivery channel is something where somebody is quite remote from you? I'm not in itself can cause a problem if you're in a conveyance of friends only ever. That never sees people face to face. That could in itself, cause problems viewing a conveyancing that doesn't conduct face to face transactions. That could cause a bit of a problem. So the next step for you really is to think about implement that risk assessment. And, as I say, go cross allowed each department and see what you can find out. And then it's about saving people really infirm and training within from to say this is all risk assessment, it's affirm. This is our risk assessment within the department. These are the things that are relevant to you knees and client groups that are relevant to you. I would recommend that you revisit this risk assessment to the point of which the legal sector affinity Greek guidance comes out on a game you might need to want to revisit your policies and procedures. Taken account of any technical detail that the legal sector affinity group guidance comes out with, They may even come out with the form of risk assessment or the SL ray linking served themselves. It's unfair at this moment in time what that guy might say on the level of detail that might go into. So really, what we're thinking about at the moment is looking those gaps. If you want to start working on this, I think it's absolutely fine to do so. I think it's a great idea to start to equip yourself with that knowledge. Those risks that we've been to that risk assessment there aren't going to change. We've pulled does form the money laundering regulations themselves, so no one can argue that they're not relevant. No one can say that, actually, that's not part parts of what you should be doing, because actually that is a requirement, what you should be doing, and if you do that, you got that. You will have that in mind, and that is what it requires you to do. Obviously, as we've said yes away have come out and said that they're not going to be thinking about prosecuting anybody for not confined within 100 regulations 2017. At this moment in time, they're only gonna be thinking about dealing with that. If somebody is being very cavalier in their attitude towards compliance, I think it's about saying to yourselves, however, you want to be ahead of the game, you want to make sure that you are compliance, want to understand what the new requirements are. He wanted to be able to demonstrate that the people people are starting to ask questions about this. I know that I have been working with the Lex L. A. System of recently with a firm, and we were asked questions. At that point in time, it is important to demonstrate that awareness, it's important have that awareness. And also if something were to go wrong, yes, maybe yes away wouldn't ask questions, but would someday else would. Your professional indemnity and sure want to know what you were doing is a firm in order to counteract money laundering that was initially that came up. So these are all really important things to think about. We can't sit around 17 lately and someone to issue that guidance. We can't sit around and wait for the legal sector affinity group Teoh issue that guidance. But I would encourage you to go and have a look at that soon as it is published on Dependent on the extent difference we made at that point in time is your new weapon on with more information in it? What are the other things that you need to be aware off While there's this new oversight regulators for money ordering off bus and they're going to be based within the f. C A. They are gonna be looking for the S R. A. Is doing in order to ensure that they are getting the right information through on the white detail through out into the sector to make sure that people doing things correctly, but then also supervising that correctly, the making sure that those arrests have encountered from a super visibly angle. So really, we can expect there's a way to be doing a lot more now in terms off ensuring that it is going to be meeting that agenda. Historically, you might say yes. L. A has focused on dealing with its own handbook and has spent less of its time focusing on compliance with the money laundering regulations. That's kind of been just a additional add on point, although it's appeared in the S always risk outlook for, you know, the last a few times that that has been issued. This is not something that they have been focusing on, what issuing lots of guns and generally speaking, the laws. A scientist Guidance has been the guidance that husband issued separately. So for me, it is a real shift in the role of the S r A. Real shifting, where there's a way will be publishing and issuing guidance and will be really interesting to see how that works in the future and what happens in respective that. So it's important to take a kind of step back and saying, But at this point in time, where we're kind of a shift, we're seeing the new regulator coming in, haven't yet been set up there, go to be providing the oversight, and we do expect this will drive a lot of SL regulation policy and a lot of s arm. A soup of is reactivity. Getting yourself ahead, I'm making sure that your stuff trained is gonna be really important to injure. That you are confident of your compliant should yes, away come and have a look at what you're doing in respect to money laundering. Nor should any questions they asked. You might also expect yes away to start being more proactive in relation to issues of sharing and gathering intelligence. This is historically something from Mike's boots. When I was at the S away that there's a way were how do units doing this? But those units, we're not necessarily working with other parts of the organization on. I think it was something where, you know, there was an improvement that yes, away could drive through there. This is something that yes, away can work on. And I think we'll be working on to try to bring more off that out. And we might see more that happening within the regulatory community, so really important to just be aware off this increased focus really important to be aware off the s always likely increased attention to this on. They're going to want to demonstrate to their own self regulator that they're doing things. So if there are winds to be found, they will find them. They will go out and have a look and see if they could find where those winds are. So it is important to think about be aware that you don't want to come to necessarily the s on his attention in relation to any of this. It's something where firms can on should be aware off the road. You know, compliance in this area to think about, make sure that they're ahead of the game in respect of this, also reported on just a highlight is well, do go away and speak to those management functions on just how I like to them the importance of this high lock to them, he s always likely increased attention in this era and also the importance of it from the perspective of these new offenses that have been created for failure to comply. I've rule. Okay, so there's the risk assessment that's there for you to take away. We've talked about all of those additional next steps that you can put into place as well. So you can go away and have a look at that. Bring that into play. In addition to that is important to now say as well that this brings us to the end of the women are. But there is a test for you to do just a small exercise and optional one when the answers will be supplying separately. So just a moment to reflect on what we've thought about and learned about today. Do you take that time in that forms part of the, um, oval? See peeking for this weapon. Okay, thanks very much. Thanks very much watching.
00:26:00
