Law Society Guidance Money Laundering Regulations 2017

You need to make your own decision about the consistency of funds with the client and whether there is any information you may suspect money laundering. You can use the instructions to identify a forged document from the issuing organization or a similar reputation source. For example, the passport office issues such information, and up-to-date invoice formats are available on utility websites. Where a practice assesses the risk of a particular factor differently from the national risk assessment or prudential guidance, for example due to the nature of the risk mitigation measures and/or the PCP of the practices, this should be clearly documented in its DWRA. Part 5 of the Regulations requires the trustees of the relevant trusts: Even if a client does not reside in a high-risk third country, you must still consider the client`s individual money laundering and terrorist financing risks and this issue. Gain practical expertise with the Anti-Money Laundering Toolkit (3rd edition) Call our free anti-money laundering helpline on 020 7320. 9544 or send an e-mail aml@lawsociety.org.uk. Open Monday to Friday from 9 a.m. to 5 p.m. Section 18 of the PCMLTFR requires you to complete a written risk assessment to identify and assess the money laundering and terrorist financing risk to which your business is exposed. The Part 2 Guidelines for Lawyers have been drafted, which recognize the specifics of law societies and the risks to which they are exposed.

In particular, it is recognized that most lawyers are self-employed, do not work directly with the lay client, and are limited by regulations in practice, meaning they do not hold client funds and do not manage their clients` affairs. If your company performs a mix of regulated and non-regulated work, MLR 2017 only applies to regulated aspects. At the end of the day, without existing criminal assets, you don`t have money laundering. For people you cannot meet in person, all geographical/legal risks (which may arise at regional or national level) must be considered (for more information, see the Risk Assessment section of these guidelines). The CDD allows you and your business to assess the money laundering and terrorist financing risks to which a client and the work you want to do may expose you. Regulation 24 of the MPR 2017 requires companies to take appropriate measures to ensure that the relevant employees and agents that the company uses for anti-money laundering work are: Verifying the source of funds involves limiting the ability of criminals to use criminal property: There can be no money laundering without criminal property. Your subsidiaries or branches in EEA countries must comply with national legislation transposing the Fourth Directive, while those outside the UK that do not have anti-money laundering and terrorist financing laws as stringent as those in the UK should, as far as possible, apply measures equivalent to those provided for in UK law. The updated regulations require that requests contain “sufficient” information for the supervisor to determine whether the test is being met. You must follow your supervisor`s instructions and provide them with the information they need to determine that the applicant does not have relevant convictions (this is often done in the form of a criminal record check). If you start trading for a wholly-owned subsidiary of an existing client, you may refer to your existing client`s CDD file to verify the details of the subsidiary, provided that the existing client has been identified in accordance with regulatory standards or a similar standard in another jurisdiction.

Call the practice consultation on 020 7320 5675 or envoyez-practiceadvice@lawsociety.org.uk an email. A key feature of the 2017 MLR is the “risk-based approach” for the prevention and detection of money laundering and the specific requirement to conduct and maintain a documented practice-wide AML risk assessment. The definition of a business relationship under the rules requires that the lawyer expect, at the time of contact, that the relationship will have an “element of duration” (R4). This must be interpreted in the broadest sense, as it is reasonable to assume that any lawyer expects that other matters can be dealt with at each first contact with a client. When dealing with a client for the first time, you must assume that a business relationship will arise, unless you have explicit reasons to know that this is not the case: that there will be no “duration element”. It was created after the introduction of regulations implementing the 5. Revision of the EU Anti-Money Laundering Directive. The regulation entered into force on January 10, 2020.

Under the POCA, you must make a report if you suspect someone is laundering money, which requires you to suspect that someone has criminal property. This guide looks at MLR 2017 from a small business perspective and provides guidance on effective compliance. Does this mean that you automatically suspect money laundering? To verify the Statement of Work in a low/medium risk transaction, you can identify the SOW by requesting and recording how the client has accumulated assets, or by verifying the client`s business interests through public searches. For low- or medium-risk transactions involving businesses and other corporate clients, you can rest assured that the intended transaction is consistent with what you know about the business. For guidance on implementing SoW in high-risk situations, see section 6.18.3. When assessing whether there is a high risk of money laundering or terrorist financing in a particular situation and the extent of measures that should be taken to manage and mitigate that risk, individuals should consider risk factors, including: Conducting customer due diligence as early as possible will also help you avoid delays in the case and help you meet the obligation to report any suspicious activity. at an early stage. This can help you avoid having to file a suspicious activity report (SAR) to obtain a money laundering defense (DAML) to return funds deposited into your client account if you suspect that the funds may be proceeds of crime. As regards data protection, training should include record-keeping requirements (Regulation 40) and the obligation under MLR 2017 to inform customers of the purpose for which their personal data is collected when carrying out customer due diligence (Regulation 41). The Money Laundering, Terrorist Financing and Transfer of Funds (Payer Information) Regulations 2017 (MLR 2017) entered into force in June 2017. The question you want to answer should not only be “Where did the money for the transaction come from,” but also “How and where did the customer get the money for that transaction or business relationship.” It is not enough to know that the money comes from a British bank account. The Legal Sector Affinity Group (LSAG) includes the Law Society and all legal sector regulators listed in the Anti-Money Laundering Regulations.

The Legal Sector Affinity Group, which represents anti-money laundering regulators in the legal sector and includes the Bar Association and the Solicitors Regulation Authority (SRA), has developed Anti-Money Laundering (AML) guidelines for the legal sector. These Treasury-approved guidelines provide more detail about MLR 2017 and what is expected of businesses, and should be read with this Quick Start Guide. You should consider whether your firm frequently serves or takes advantage of clients who operate businesses with high cash turnover, as these can be attractive to criminals who want to launder money. Non-commercial businesses may also fall into this group, including charities whose funds come from multiple sources and are difficult to verify, although this may pose a higher risk in the context of terrorist financing. Complete our series of anti-money laundering online courses led by a leading risk management expert. Courses cover suspicious activity, money laundering offences, risk assessments, due diligence and source of funds. The updated guidelines still need to be approved by the UK Treasury. There are no black or white rules that tell you that your business is at high risk of being exposed to money laundering activities. For example, activities with a lower risk of money laundering are not covered: some independent legal professionals are authorised and regulated by the Financial Conduct Authority (FCA) because they are involved in core regulated activities: for example, advising clients directly on investments such as stocks and shares. Those professionals should also take into account the guidelines of the Joint Steering Group on Money Laundering. You must establish and maintain written policies, controls and procedures to manage and mitigate the money laundering and terrorist financing risks identified in your risk assessment.

These must be: Paragraph R21(1)(a) requires a practice to appoint, where appropriate to the size and nature of the entity, a member of the board (or equivalent governing body) or a member of the senior management team (the “board-level person”) who is accountable for the compliance of the practice. This role is commonly referred to as the Money Laundering Compliance Officer or MLCO. The 2017 MPR sets out additional obligations for private sector entities operating in areas with a higher risk of money laundering. Your risk assessment should also consider the steps you have taken to mitigate the money laundering and terrorist financing risks your business faces. The MLR 2017 states that, depending on the size and nature of your business, you must: In addition to the specific customer due diligence requirements with which you must comply under the regulations, the amount, nature and amount of customer due diligence must reflect and mitigate the nature of the specific risks associated with each customer, are associated with a transaction or question.