Category Archives: Money laundering news

SRA money laundering review – Firms not taking money laundering regulations seriously

Photo of British money

The SRA announced earlier this year that it would be launching a crackdown against firms who fall foul of money laundering procedures.

As an initial assessment, the SRA wrote to a sample of 400 out of the approximately 7,000 SRA-regulated firms required to comply with the Money Laundering Regulations 2017, asking them to demonstrate compliance with the regulation. The SRA was mainly checking that firms have a money laundering risk assessment and implementation plan in place. The assessment came in response to an increase in dirty money entering the UK and a lack of reporting of suspicious activity by lawyers and accountants, with lawyers often seen as an easy target for laundering money.

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The Fifth Directive and how it affects enhanced due diligence

The Fifth Money Laundering Directive is set to be transposed into national law by 10 January 2020. The 5MLD came about in response to terrorist attacks across the EU and offshore leaks investigated in the Panama papers. It addresses modern day money laundering concerns that were not sufficiently covered in the Fourth Directive. The core aim of the 5MLD is to address modern day money laundering concerns that were not covered in the Fourth Directive. One of the key changes to money laundering regulations that the Fifth Directive will bring is that Member States will have to implement enhanced due diligence (EDD) measures to monitor suspicious transactions involving high-risk countries more strictly.

How will the Fifth Money Laundering Directive affect enhanced due diligence?

The Fifth Directive will require enhanced due diligence when dealing with transactions from high-risk countries. As well as obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and the background of the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high-risk countries for money laundering.

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Anti-money laundering – When and how to submit a suspicious activity report

Money laundering is a worldwide crime that is estimated to total over $2 trillion annually. In the past 20 years, laws have been put in place in the UK to crack down on this crime. This includes Client Due Diligence (CDD) procedures your firm must follow to ensure that your firm is not assisting in money laundering activities. When staff or businesses witness any suspicious activity, they are required to submit a suspicious activity report (SAR). Here is a short guide to what a SAR consists of and how to submit one.

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The Fifth Directive – The compliance officer’s guide to AML

Nick Henderson, Director of Course Development at VinciWorks
Nick Henderson, Director of Course Development at VinciWorks

The UK is obligated to transpose Directive (EU) 2018/843, commonly known as the Fifth Money Laundering Directive (5MLD), into national law by 10 January 2020. Despite Brexit and the flexible date of Britain leaving the EU, the terms of the implementation of 5MLD are set out in the Withdrawal Agreement between the UK and European Commission. Even if such an agreement doesn’t end up being the foundation of Brexit, the 5th Directive will need to become law in the UK.

In April 2019, the UK government launched its consultation on transposing the Fifth Directive into UK law. It contains a number of important expected changes and additional obligations all compliance officers should know about. For those who wish to respond, the consultation is running until 10 June 2019.

Here, we provide a comprehensive accounting of all the key changes compliance officers should know about the Fifth Directive.

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Estate agents hit with surprise HMRC inspections

UK estate agents were hit last week with surprise HMRC inspections as part of a week-long crackdown on money laundering in the property industry.

HMRC paid surprise visits to estate agents after they were suspected of trading without being registered as required under money laundering regulations. In all, agents in London (35), Leicester (5), South Bucks and Berkshire (4), Greater Manchester (3), Watford (1), Wakefield (1) and Wolverhampton (1) were raided in order to determine their compliance with money laundering regulations of 2017.

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VinciWorks’ Director for Legal Services shares 2019 compliance priorities for solicitors

Director for Legal Services Pip Johnson
Pip Johnson, Director For Legal Services at VinciWorks

In a recent article published by QBE insurance group on the risks that law firms should look out for in 2019, our Director for Legal Services Pip Johnson shared her insights together with other compliance experts.

Pip flagged the Fifth Money Laundering Directive, which must be implemented into national regulations by this time next year. While the Fifth Directive is not as extensive as the Fourth Directive that came into force in 2017, there are still some changes to take on by the beginning of 2020. These changes include the regulation of cryptocurrencies such as Bitcoin, with some firms already having been asked to accept cryptocurrency payments. The Fifth Directive will also see enhanced due diligence requirements. Of course, Pip also discussed the effect Brexit could have on UK lawyers, with the UK due to implement its own Sanctions regime.

Other key takeaways from the interview:

  • EU Council Directive 2018/822, (DAC 6), that came into force last June requiring intermediaries involved in cross border tax transactions to retain details of potentially tax advantageous matters
  • An expected increase of comlaints to the Information Commissioner’s Office (ICO) for GDPR breaches
  • The upcoming reformed SRA Handbook and the new Accounts Rules
  • How Brexit could effect the UK’s laws and regulations and how they apply to UK law firms

You can read the full report from QBE here.

What is the Fifth Money Laundering Directive? What you need to know

Money laundering in the news

The Fifth Money Laundering Directive has been passed. Here’s what you need to know

The Fourth Money Laundering Directive may have only recently been implemented into national law around the EU, but on 19 April 2018, the European Parliament announced it had adopted the Fifth Anti-Money Laundering Directive. On 19 June 2018 the final text was published. EU members will have 18 months to transpose the Fifth Directive into national law. However, some countries have already done so.

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Cryptocurrency and blockchain: What’s the money laundering risk?

Bitcoin coins on a computer

With close to 2,000 cryptocurrencies such as Bitcoin in circulation, regulating the currency is a key objective of the Fifth Money Laundering Directive

Cryptocurrencies and blockchains are set to be a key compliance theme of 2019, with the upcoming Fifth Money Laundering Directive setting out to regulate cryptocurrencies. While the first and most common cryptocurrency is Bitcoin, there are now close to 2,000 in existence, with the number continuing to grow. This level of growth causes two core issues; namely that cryptocurrencies are currently unregulated and that they can be used to launder money due to the unique way in which they are traded. In addition, some cryptocurrencies are either fake or are used to fuel financial scams.

A lot of the guidance below is taken from the cryptocurrency module in VinciWorks’ anti-money laundering refresher course.

What are cryptocurrencies?

In cryptocurrency, a network of peers maintains a complete history of all transactions, and the balance of every account using that cryptocurrency. This secure system is known as the blockchain.

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GDPR and Section 11 of the Criminal Finances Act 2017

Judge sitting at his desk

Section 11 of the Criminal Finances Act 2017 amends the Proceeds of Crime Act (POCA) and affects the regulated sector. The new data sharing regime enables regulated persons to request and share information with their regulated peers, free in most respects from contravening the EU’s General Data Protection Regulations (GDPR). Any disclosure “made in good faith” that does not breach any duties of confidence or “any other restriction on the disclosure of information”.

The purpose is to encourage the sharing of information from different entities in the regulated sector and better enable the collation of multiple reports of potential money laundering into a single Suspicious Activity Report (SAR).
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What is the Unexplained Wealth Order?

Harrods, Central London

Zamira Hajiyeva spent an average of £4,000 a day in Harrods over 10 years

A woman who spent nearly £16m over a decade in Harrods and once spent £150,000 in a single day became the first target of the recently-introduced Unexplained Wealth Order (UWO). Under this provision of the Criminal Finances Act, which came into force on 31 January 2018, the Azerbaijan international, Zamira Hajiyeva, must give proof of how she and her husband can afford their luxury lifestyle. This includes a £15m home in Central London, an average spend of £4,000 a day at Harrods over ten years and a £10m golf course near Ascot. Should she not have an adequate explanation, she would be the first to be brought to account for unexplained wealth.

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