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CISI LEEDS 23 rd May 2013

CISI LEEDS 23 rd May 2013. John Horan BA ( Hons ) MICT Ltd Tel: 02071250147 Mobile 07733887262 Website: www.mict-ltd.com E-mail john.horan@mict-ltd.com. SAR = S uspicious A ctivity R eport SOCA = S erious O rganised C rime A gency KYC = K now Y our C ustomer

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CISI LEEDS 23 rd May 2013

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  1. CISI LEEDS23rd May 2013 John Horan BA (Hons) MICT Ltd Tel: 02071250147 Mobile 07733887262 Website: www.mict-ltd.com E-mail john.horan@mict-ltd.com

  2. SAR = Suspicious Activity Report SOCA = Serious Organised Crime Agency KYC = Know Your Customer KYR = KeepYourself Right Some common acronyms

  3. Written internal report with regard to suspicious activity Note activity not “transaction” Could be the client What he/she wants Where they want it SAR

  4. Home of the United Kingdom Financial Intelligence Unit (FIU) Previously National Criminal Intelligence Service (NCIS) Before that National Drug Intelligence Unit (NDIU) Soon the be the National Crime Agency (NCA) SOCA covers England, Wales and Northern Ireland NDA will cover England and Wales (at the moment) SOCA

  5. Know Your Customer • Beware of: • secrecy • insufficient or suspicious information • Needs to check with someone else • activity inconsistent with normal business • Business lacks viability but continues to trade • sudden changes in transactions particularly upwards • See saw effect does not follow market

  6. Know Your Customer • Take all reasonable steps in each particular circumstances • What is the rationale behind the instruction or business. • Do not generalise or stereotype

  7. Risk based approach (CDD & EDD) All bodies FATF etc. recognise Money Laundering cannot be completely eradicated Prescriptive approach abandoned PEPs and Sanctions Senior Management responsibility Key areas

  8. A risk based approach • Risks posed by the client • Complex business structure with no legitimate commercial rationale • Easier to conceal underlying beneficiaries • Politically Exposed Persons • In a public position and/or location which carries a higher risk to exposure of corruption • Based in, or conducting business in/through high risk jurisdiction • Business involves significant amounts of cash

  9. Money Launderers come in all shapes and sizes The bigger the money launderer the more legitimate he appears A veneer of respectability often hides a corrupt interior It is not difficult to fool even an astute person We do not deal with criminals!

  10. Prevents unwanted attention from Law Enforcement Prevents victims retrieving their property or being compensated for their loss out of criminals proceeds Ensures profit from crime available for Lavish lifestyle, holidays, etc Re-investment in criminal activity Why launder?

  11. Who launders? • Organised Crime • Paramilitaries • Drug traffickers • Tax evaders!!

  12. Legislation • Money Laundering Regulations 2007 • Proceeds of Crime Act 2002 • Terrorism Act 2000 • And a plethora of amending legislation!

  13. Legislation • Money Laundering Regulations 2007 • Imposes obligations on the regulated individual/firm • Policed by the designated regulatory bodies • ICAEW, HMRC, FCA, OFT RPA etc. • Can prosecute/penalise • Breaches used to corroborate money laundering charges

  14. Review procedures annually Appoint MLRO Senior Management Responsibility Money Laundering Regulations 2007 Ensure staff understand training Risk based approach Train all relevant staff Create procedures and systems An implementation guide to the Money Laundering Regulations 2007

  15. Legislation • Proceeds of Crime Act 2002 • Creates the money laundering offences • Targeted at individuals • Wide ranging and draconian • Provides for restraint and confiscation

  16. Concealing, Disguising Converts Transfers removes Acquisition Use Possession Enters into An arrangement Which facilitates Acquisition retention Use or control Proceeds of Crime Act 2002 Tipping Off Failure to disclose Offences under the Proceeds of Crime Act 2002

  17. Legislation • Terrorism Act 2000 • Criminalises the financing of terrorism • Principal difference to Money Laundering • Funds can be from a legitimate source • Small amounts • Terrorism can be a cheap crime

  18. Who investigates? • 52 Territorial Police Forces in the UK less now that the Scottish have amalgamated • 3 Special Police Forces • Ministry of Defence Police (MDP) • British Transport Police (BTP) • Scottish Drugs Enforcement Administration (SDEA) • Other agencies • Serious Organised Crime Agency (SOCA) • Her Majesty’s Revenue and Customs (HMRC) • Department of Works and Pensions (DWP) • Social Security Agency (SSA) • Serious Fraud Office (SFO) • Financial Conduct Authority (FCA) • Prudential Regulatory Authority

  19. The Bribery Act • Government guidance • Tough rules...directed at making life difficult for the mavericks responsible for corruption • Largely about common sense • Core principal proportionality • No one wants to stop firms...taking their clients to Wimbledon • Creates clarity and a level playing field. • (Kenneth Clarke Secretary of State for Justice Mar 2011)

  20. The law enforcement attitude • Legislation is designed to be self enforcing • The old standby, good systems and procedures • Likely to be regulator enforced rather than Law enforcement agency enforced. • LEA enforced usually means gone over to the “dark side” • Regulator enforced usually means breaches – deliberate, accidental or negligent

  21. The law enforcement attitude • Be careful! • All agencies will be looking for a quick win “pour encourager les autres” • Witch hunts will not be on the agenda • Remember an offence under the Bribery Act may form the predicate offence under the Proceeds of Crime Act 2002

  22. Predicate offence? • Forms the basis for a money laundering investigation • Bribe of £50,000 to win contract of £2million • All £2million = proceeds of crime = confiscation • “Fruit of the poison tree”

  23. Confiscation orders • 2008/2009 • 5,382 orders made for £145.5million £62 million • 2009/2010 • 5,335 made for £134.6 million £64.2 million • 2010/2011 • 6,231 made for £195.4 million £74.5 million • 2011/2012 • 6,150 made for £161.6 million £104.2 million • 2012/2013 • 6,227 made for £277.5 million £108.3million

  24. 4MD The Fourth EU Directive on Money Laundering • Key areas of change • One off limit reduced from €15,000 to €7,000 • Previously Casinos only caught by Due Diligence extended to other gambling institutions • Tax evasion to be predicate offence in all EU countries (already is in the UK) • PEPs to include domestic PEPs

  25. CISI LEEDS23rd May 2013 John Horan BA (Hons) MICT Ltd Tel: 02071250147 Mobile 07733887262 Website: www.mict-ltd.com E-mail john.horan@mict-ltd.com

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