‘Anti-Money Laundering’ or ‘AML’ could refer to any law, regulation or procedure designed to respond to the threat of money laundering.
A typical money laundering scheme involves placing ‘dirty’ money into the financial system (placement), moving it around the system to hide its source (layering), and returning the ‘cleaned’ money to the criminal’s pockets (integration).
Criminals launder money in order to mask the proceeds of crime, so that they appear to have originated from a legitimate source.
The AML laws and processes which are relevant to you will depend on the jurisdiction in which you are based, the organisation you work for, and the industries in which you or your clients operate.
Understanding the new anti-money laundering regulations
The Sixth Money Laundering Directive was required to be implemented into national law across the EU by 3 December 2020. In some countries, such as Germany who implemented the Sixth Directive last month, this required a paradigm shift in how money laundering offences are prosecuted in Germany. The German law abandoned the concept of a catalogue of predicate offenses in favour of an ability to capture profits derived from any criminal activity.
FCA investigators have clearly not been furloughed
In 2019, the FCA registered nearly £400 million in fines for compliance breaches, and despite the pandemic, investigators are striking out high and fast against non-compliance. In the first half of 2020, only four cases have resulted in a fine, but collectively those fines have already reached £100 million.
The Sixth Directive is due to be implemented into national law by 3 December 2020. While the UK anti-money laundering regime already complies with a great deal of it, the Sixth Directive calls for the introduction of a new corporate offence for failing to prevent money laundering, which is not included in the UK regime.
The UK already has a few corporate ‘failure to prevent’ laws on the books in the form of failure to prevent bribery and tax evasion. Whether the UK is required to implement this new failure to prevent money laundering rule will depend on the status of the transition period at the time. The Sixth Directive focuses on harmonising money laundering offences across the EU, such as extending criminal liability to legal persons and aiding and attempting to commit money laundering should be an offence.
While much of the world has been in lockdown and most staff have been working from home, financial crime has not disappeared. In fact, fraud has become more sophisticated than ever with many criminals using the pandemic as an opportunity to exploit vulnerabilities. It is crucial to adapt financial crime controls such as anti-money laundering (AML) procedures to the specific needs of the crisis. Financial crime procedures should be kept under frequent review as the pandemic progresses.
Here are some tips on how to protect your firm from financial crime during the pandemic and beyond.
When it comes to compliance training, the antidote to boredom is relevance.
Training that isn’t relevant is boring, unengaging and of limited effect. Training that resonates with the user, that feels like it was written with his or her particular industry, practice area or job role in mind, works.
Content that isn’t engaging isn’t going to stick and will ultimately waste the learner’s time. Boring content, along with a lack of interaction, severely harms the effectiveness of training. With regulators increasingly taking a deeper look at the content of training, not just completion records, training that merely ‘ticks the box’ with a one-size-fits-all approach will ultimately fail.
Much of the world is still under lockdown, but many businesses are working hard to keep economically active during the crisis. Unfortunately, where there is financial activity, there’s also the risk of financial crime. Google has seen more than 18 million corona or COVID-19 related malware and phishing attacks per day.
In our 15-minute on-demand webinar, our Director of Learning and Content Nick Henderson takes us through the schemes scammers are deploying to exploit the pandemic. He also shares guidance on how we can protect ourselves and our businesses against these risks.
All gambling operators have a statutory duty to keep financial crime out of gambling. The Proceeds of Crime Act 2002 (POCA) obligates gambling operators to be alert to customers who try to gamble unlawfully acquired money. Money laundering includes both using illegal cash to clean the money as well as simply using it to fund gambling.
Money laundering risks are not only found in the operator-to-customer relationship, however. They can also occur in business-to-business relationships, as well as with any third parties operators contract with.
Details of the extension of the trust registration service under the Fifth Directive
On 24 January 2020, HMRC launched their promised technical consultation on changes to the Trust Registration Service (TRS) to be made under the Fifth Anti-Money Laundering Directive.
The changes will focus on the registration requirements of all UK and many non-EU resident express trusts, whether or not they incur a UK tax consequence. This could extend the number of registrable trusts from around 200,000 to over two million.
The Fifth Money Laundering Directive comes into force on 10 January 2020. All VinciWorks courses have been automatically updated to ensure that they reflect the latest regulations across all relevant jurisdictions.
There is no technical impact for any of our existing clients whether on the LMS or SCORM.
All course enrolments, both in-progress and all new enrolments will be updated for the Fifth Directive.
After an extensive review of the new regulations, we have concluded that the training impact for most regulated businesses in the UK is minor. As a vanguard in the fight against money laundering and terrorist financing, the UK already implemented many of the provisions of the Fifth Directive in 2017. For example, the Fifth Directive requires enhanced due diligence for transactions involving high-risk countries, a requirement that already exists in the Money Laundering Regulations 2017. The Fifth Directive also introduces new requirements for cryptocurrency, letting agents and art dealers but these requirements do not affect most regulated businesses.