UK law and guidance
Anti-Money Laundering UK - Money Laundering Regulations 2017 (as amended).
Updates to AML legislation - new responsibilities on proliferation financing
A new statutory instrument The Money Laundering and Terrorist Financing (Amendment) (No 2) Regulations 2022 has made amendments to the money laundering regulations. Firms are now required to perform a proliferation financing risk assessment (similar to the AML firm-wide risk assessment) so that each firm can assess the risk it may be used to enable proliferation financing. The legislation (new Regulation 16A) defines proliferation financing as
' the act of providing funds or financial services for use, in whole or in part, in the manufacture, acquisition, development, export, trans-shipment, brokering, transport, transfer, stockpiling of, or otherwise in connection with the possession or use of, chemical, biological, radiological or nuclear (CBRN) weapons, including the provision of funds or financial services in connection with the means of delivery of such weapons and other CBRN-related goods and technology, in contravention of a relevant financial sanctions obligation.'
The definition of ‘relevant financial sanctions obligation’ refers to the UN Security Council Resolutions (UNSCRs) covering Iran and Democratic People’s Republic of Korea (North Korea /DPRK). A key focus is the implementation of sanctions regimes on Iran and North Korea.
New Regulation 18A requires firms to undertake a risk assessment in relation to proliferation financing making reference to the usual risk factors e.g., its customers, the countries or geographic areas in which it operates, its products or services, its transactions and its delivery channels.
New Regulation 19A requires firms to establish and maintain policies, controls and procedures in relation to proliferation financing.
The updated AMLGAS provides guidance - Para 2.7 defines proliferation financing with further information surrounding the policies and procedures now required in this area provided within para 3.6.2. Given the significant focus of the UNSCRs, UK legislation and FATF guidance on proliferation financing relate directly to Iran and North Korea, the provision of accountancy services to companies connected with either of these jurisdictions poses an extremely high risk.
Firms may access the UK National Risk assessment on proliferation financing here.
The consolidated Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 is available here.
AML guidance for the accountancy sector
The CCAB has published the latest version of its Anti-Money Laundering Guidance for the Accountancy Sector (AMLGAS), together with the Supplementary Tax Appendix and the Supplementary Insolvency Appendix, following HM Treasury’s approval of the document. The explanatory memorandum will be published when available.
This updated guidance is based on the law and regulations as of 1 August 2022.
Supplementary Tax Appendix and Supplementary Insolvency Appendix
HM Treasury has also approved the Supplementary Guidance documents for Tax Advisors and Insolvency Practitioners. These supplementary guidance documents are not standalone but should be read in conjunction with the main AML Guidance for the Accountancy Sector discussed above.
Risk Outlook (updated) - Circumstances where there may be high risk of money laundering, terrorist financing or proliferation financing in the accountancy sector
Both Irish and UK AML legislation requires firms to take the appropriate steps to identify and assess the risk that they could be used for money laundering and terrorist financing, and in the UK, also proliferation financing.
The Accountancy AML Supervisors Group (AASG) in the UK has recently updated its Risk Outlook Guidance which identifies those circumstances where there might be a high risk of money laundering, terrorist financing or proliferation financing in the accountancy sector. (Although drafted pursuant to UK AML legislation, many of the risks are also relevant in Ireland.)
This Guidance has been updated to include risks associated with the following:
- Complex supply chains
- Crypto
- Register of Overseas Entity verification
- Services subject to trade sanctions
- Proliferation financing
- Contractors or agency workers paid by umbrella companies
Crime
Indicators for Accountants – AML
Professional Standards recently attended a presentation by
the Metropolitan Police on key crime indicators within the accountancy sector.
The information was based on real-life investigations and focussed on red flags
that accountants may come across when reviewing accounting records which may in
certain circumstances raise suspicion, including:
- Lack of sales records
- Income received at odd
times of day
- Lack of assets
- Lack of staff costs
- Loans
For more information click
here. If you have knowledge or suspicion of money laundering this should be
reported to the firm’s MLRO who will consider whether a Suspicious Activity
Report needs to be made to the National Crime Agency.
Suspicious Activity Reports (SARs) - National Crime Agency (NCA) Guidance Documents
Introduction
A SAR is a Suspicious Activity Report, a piece of information which alerts law enforcement that certain client/customer activity is in some way suspicious and might indicate money laundering or terrorist financing.
For further information, please click here for an introduction to SARs.
Click Accountancy Sector SAR Template Dec 2017 a guidance document for help when making a SAR produced by the Accountancy Sector / NCA Engagement Group
Click UKFIU SAR Guidance Signpost Doc ( Nov 2017) - an NCA document signposting where additional SAR guidance can be found.
NCA Glossary Code and Reporting Routes
Updated UKFIU SAR Glossary Codes
The UKFIU has implemented three new SAR Glossary Codes for MLROs as a result of the increased threat posed by organised crime groups (OCGs) seeking to exploit the COVID-19 situation by means of fraud.
The Glossary Codes and Reporting Routes information can be found on the NCA website at the below link;
Suspicious Activity Report - Glossary Codes and Reporting Routes
Key points
The use of glossary codes is considered good practice and will allow the UK Financial Intelligence Unit (UKFIU) and wider law enforcement to conduct analysis to identify money laundering trends, high risk cases for development and take immediate action where necessary.
The SARs regime is not a route to report crime or matters relating to immediate risks to others. The SARs regime is for reporting knowledge or suspicions of money laundering, or belief or suspicions relating to terrorist financing.
NCA Suspicious Activity Reports - Annual Reports
The UK Financial Intelligence Unit publish Suspicious Activity Reports (SARs) Annual Reports. These Report set out the factual detail of activity during the year with the headline statistic being the continued increase in the number of SARs submitted. To view reports, please click below:
Suspicious Activity Reports Annual Report 2017
Suspicious Activity Reports Annual Report 2015
NCA Guidance on Submitting better quality SARS.
Click here for a document which aims to provide all reporters with guidance on how to submit better quality SARs to the NCA.
NCA - Confidentiality of SARs
The confidentiality of Suspicious Activity Reports is still a live issue. The Accountants Affinity Group within the Anti-Money Laundering Supervisors Forum has recently recommended that members be reminded of guidance available on this subject.
As part of this, ICAEW have kindly made available the technical release on the Confidentiality of SARs while the UK Financial Intelligence Unit (UKFIU) have recently updated its guidance on submitting a Suspicious Activity Report (SAR) within the regulated sector.
Anti-money laundering: updated guidance on financial sanctions enforcement.
The Office of Financial Sanctions Implementation (OFSI) helps to ensure that financial sanctions are properly understood, implemented and enforced in the United Kingdom. OFSI, which is a part of HM Treasury, enables financial sanctions to make the fullest possible contribution to the UK’s foreign policy and national security goals. It also helps to maintain the integrity of, and confidence, in the UK financial services sector.
The UK Government has extended powers to act against those who don’t report information that could undermine UK financial sanctions. All businesses, organisations and individuals have an obligation under financial sanctions regulations to report information which facilitates compliance. However, enforcement action could only be taken against firms or people in the regulated financial services sector who failed to report.
The extended powers, set out in new regulations, broaden enforcement to the following business areas from 8 August 2017:
- auditors
- casinos
- dealers in precious metals or stones
- estate agents
- external accountants
- independent legal professionals
- tax advisors and
- trust or company service providers
Prompt reporting of information is essential for financial sanctions to be an effective foreign policy and national security tool. For instance, it helps the Office of Financial Sanctions Implementation (OFSI) to detect breaches and identify those who evade sanctions by using different aliases
The new regulations extend existing powers without creating new ones or changing the purpose of the law. The only change is that from 8 August these groups may commit a criminal offence if they do not report the information they should already be reporting to OFSI.
OFSI have updated the Guide to Financial Sanctions to help individuals and businesses understand what they should report and when. All impacted businesses are encouraged to review their responsibilities as non-compliance could lead to a monetary penalty or criminal prosecution.
As well as new information on reporting obligations, the updated Guide clarifies OFSI’s existing positions on organisations owned or controlled by those subject to sanctions, as well as the process for obtaining a licence.
OFSI’s Guide to Financial Sanctions is published on OFSI’s GOV.UK pages: https://www.gov.uk/government/publications/financial-sanctions-faqs
To stay up-to-date on financial sanctions, subscribe to OFSI’s e-alert.
Alternatively, you can contact OFSI directly:
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