Businesses and sole traders with obligations under the Money Laundering Regulations (MLR) are required to be regulated by a supervisory authority. These include bodies such as the FCA, HMRC, The Gambling Commission and certain professional bodies. Businesses operating as an accountancy service provider are overseen by the HMRC and in additon to the MLR obligations, have specific requirements they must comply with.
Where a business has obligations under the Money Laundering Regulations (MLR), they must use a risk-based approach to identify, assess and prevent money laundering. Carrying out an AML Risk Assessment involves several steps, which can include (but are not limited to): –
– Identifying the money laundering risks relevant to your business.
– Completing a company-wide risk assessment which includes areas such as delivery channels, transactions, products/services, customer behaviour etc.
– Assessing the risks associated with your customers.
Any policy within a business should start by defining what the included content covers. The introduction does not need to be extensive. However, it should give anyone referring to the policy sufficient information to understand what the policy relates to.
Money laundering is the term used to describe the process or act of disguising or hiding the original ownership of money that has been obtained through criminal acts such as terrorism, corruption or fraud. Such monies are then moved through legitimate businesses or sources to make it appear ‘clean’.
Most firms will have an Outsourcing Policy Template that is used to document their objectives and procedures for outsourced services and functions. The term ‘outsourcing’ refers to any business function or service that is provided by, or contracted out to an external provider or supplier.
Common examples of functions that are outsourced or are provided by an external supplier include postal and mailing services; shredding and confidential waste disposal; IT services and disaster recovery; debt collection and translations.
Businesses with anti money laundering obligations are required to carry out a risk assessment. Most importantly, the aim of this is to identify, assess and mitigate risks associated with financial crime. The FCA and HMRC are two of the bodies acting as supervisory authorities for the MLR. For instance, both have rules and guidance on the risk assessment process.
The Government is currently seeking feedback on their intended amendments to the UK’s Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The consultation closes on 14th October 2021 with changes likely to be enforced from Spring 2022.