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Anti money laundering definitions

Definitions relating to guidance on anti money laundering.

A

accountancy services

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accountancy services

Accountancy services includes for the purpose of this Guidance any service provided under a contract for services (ie, not a contract of employment) which pertains to the recording, review, analysis, calculation or reporting of financial information.

alerting a money launderer

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alerting a money launderer

Disclosures that do not constitute tipping off but which nonetheless alert the money launderer to the suspicion regarding their activities.

anti-money laundering supervisory authorities

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anti-money laundering supervisory authorities

Bodies identified by Regulation 23, 2007 Regulations as being empowered to supervise the compliance of individuals and businesses with the 2007 Regulations . The professional bodies designated as anti-money laundering supervisory authorities are listed in Schedule 3 to the 2007 Regulations.

B

business

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business

A company, partnership or other organisation undertaking defined services . This includes accountancy practices, whether structured as partnerships, sole practitioners or corporate practices.

business relationship

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business relationship

A business, professional or commercial relationship between a relevant person (ie someone to whom the Regulations 2007 apply) and a customer, which is expected by the relevant person, at the time when the contact is established, to have an element of duration.

C

CCAB

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CCAB

Consultative Committee of Accountancy Bodies: body representing the Institute of Chartered Accountants in England and Wales; the Institute of Chartered Accountants of Scotland; the Institute of Chartered Accountants in Ireland; the Association of Chartered Certified Accountants; the Chartered Institute of Management Accountants; and the Chartered Institute of Public and Finance and Accountancy. [ http://www.ccab.org.uk/]

client

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client

A person in a business relationship , or carrying out an occasional transaction, with a business.

consent

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consent

Permission given, generally by SOCA , for the carrying out of any action that would constitute a money laundering offence in the absence of that permission. The definition and ruling legislation for the giving of consent is in s.335, POCA , which also deals with the passing of the consent from the MLRO to the individual concerned (s.336).

credit institution

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credit institution

Has the meaning given by Regulation 3(2), 2007 Regulations.

criminal conduct

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criminal conduct

Conduct that is an offence in any part of the UK as well as conduct occurring elsewhere that would have been an offence if it had taken place in the UK. There are very limited exceptions to this for conduct which is both known to be legal in the country in which it is committed and which falls within the specific exceptions set out in orders made by the Secretary of State.

criminal property

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criminal property

The benefit of criminal conduct where the alleged offender knows or suspects that the property in question represents such a benefit (s.340, POCA ).

customer due diligence

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customer due diligence

The process by which KYC information is gathered, and the identity of a client is established and verified, for both new and existing clients.

D

defined services

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defined services

Activities carried on, in the course of business by businesses or individuals as an auditor, external accountant , insolvency practitioner or tax adviser (Regulation 3(c), 2007 Regulations ), or as trust and company service providers (Regulation 3(e), 2007 Regulations ). It also includes persons providing services under the Designated Professional Body provisions of Part XX, s.326 FSMA 2000 or otherwise providing financial services under the oversight of their professional body.

E

EEA

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EEA

European Economic Area countries, which are the European Union member states plus EFTA (European Free Trade Association) member states.

enhanced due diligence

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enhanced due diligence

Additional due diligence steps that must be applied in situations where there is a higher risk of money laundering or terrorist financing and in a number of specific situations (Regulation 14), of which two are relevant to providers of defined services ; where the client has not been physically present for identification purposes, if a business relationship or occasional transaction is to be undertaken with a politically exposed person (PEP).

external accountant

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external accountant

Means a firm or sole practitioner who by way of business provides accountancy services to other persons, when providing such services (Regulation 3(7), 2007 Regulations).

F

FATF

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FATF

Financial Action Task Force, created by G7 nations to fight money laundering.

financial institution

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financial institution

Has the meaning given by Regulation 3(3), 2007 Regulations.

financial restrictions

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financial restrictions

See Glossary annex B.

FSA

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FSA

Financial Services Authority: statutory regulator of most financial services providers under the Financial Services and Markets Act 2000.

FSMA 2000

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FSMA 2000

Financial Services and Markets Act 2000.

G

guidance

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guidance

Guidance which is

issued by a supervisory authority or any other appropriate body;

approved by the Treasury; and

published in a manner approved by the Treasury as suitable in their opinion to bring the Guidance to the attention of persons likely to be affected by it.

In this Guidance , the term has been used for Guidance for which Treasury approval has been applied, and is expected to be obtained, as well as that which already has Treasury approval. The circumstances in which Courts and others are required to take the Guidance into account in determining whether an offence has been committed are set out in POCA and the 2007 Regulations .

Any use of the term 'guidance' outside this definition, has not been italicised in this Guidance.

H

I

independent legal professional

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independent legal professional

Provider of legal or notarial services as defined in Regulation 3(9) in the 2007 Regulations.

individuals

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individuals

Includes sole practitioners and the partners, directors, subcontractors, consultants and employees of businesses.

insolvency practitioner

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insolvency practitioner

Means any person who acts as an insolvency practitioner within the meaning of s 388 Insolvency Act 1986 or Article 3 of the Insolvency (Northern Ireland) Order 1989 (Regulation 3(6), 2007 Regulations).

internal report

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internal report

A report made to the MLRO in a business.

J

JMLSG

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JMLSG

Joint Money Laundering Steering Group: body representing UK Trade Associations in the Financial Services Industry and aiming to promote good anti-money laundering practices and give relevant practical Guidance. [http://www.jmlsg.org.uk/bba/jsp/polopoly.jsp;jsessionid=a1hFgDReOPo_?d=749]

K

L

M

MLRO

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MLRO

Money Laundering Reporting Officer. This term is used to describe the nominated officer appointed under Regulation 20(2)(d), 2007 Regulations and as referred to in s.331, POCA.

money laundering

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money laundering

For the purposes of this Guidance , money laundering is defined to include those offences relating to terrorist finance, which require to be reported under the TA 2000 , as well as the money laundering offences as defined in POCA.

money laundering directive

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money laundering directive

References in this Guidance are to the Third Money Laundering Directive (DIRECTIVE 2005/60/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing) [ http://eur-lex.europa.eu/LexUriServ/site/en/oj/2005/l_309/l_30920051125en00150036.pdf ]

money laundering offences

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money laundering offences

One of the three money laundering offences defined under ss.327-329, POCA . In summary the offences comprise the following activities, where a person:

conceals , disguises, converts or transfers criminal property , or removes criminal property from England and Wales, or from Scotland or from Northern Ireland (s.327);

enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person (s.328); or

acquires , uses or has possession of criminal property except where adequate consideration was given for the property (s.329).

money laundering reporting officer

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money laundering reporting officer

See MLRO above.

N

nominated officer

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nominated officer

Officer required to be appointed by businesses carrying on business in the regulated sector. See MLRO above.

O

overseas conduct exemption

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overseas conduct exemption

Exemption from reporting requirement where an act is reasonably believed to have taken place outside of the UK, and the act was known to be lawful when committed under the criminal law of the place where the act was committed, and the maximum sentence if the act had been committed in the UK would have been less than 12 months (except in the case of an act which would be an offence under the Gaming Act 1968, the Lotteries and Amusements Act 1976 or under ss.23 or 25, FSMA 2000 ).

P

PEP

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PEP

Politically exposed persons, as defined in the 2007 Regulations paragraph 14(5) and paragraph 4(1)(a) of Schedule 2. See also sections 5.27 to 5.29 above.

POCA

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POCA

Proceeds of Crime Act 2002.

predicate offence

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predicate offence

Means the underlying offence or any offence as a result of which criminal property has been generated.

prejudicing an investigation

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prejudicing an investigation

Prejudice an investigation  A 'related' money laundering offence, defined under s.342, POCA . In summary, it captures the making of any disclosure that is likely to prejudice an investigation or falsifying, concealing, or destroying, any documents that are relevant to a money laundering investigation, or being complicit in such behaviour.

privilege reporting exemption

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privilege reporting exemption

An exemption from reporting suspicions formed on the basis of information received in privileged circumstances (see Sections 7.26?7.46 of this Guidance ).

Q

R

regulated investment market

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regulated investment market

Within the EEA, has the meaning given by point 14 of Article 4(1) of the Markets in Financial Instruments Directive (MiFID); and outside the EEA, means a regulated financial market which subjects companies whose securities are admitted to trading to disclosure obligations which are contained in international standards and are equivalent to the specified disclosure obligations.

regulated sector

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regulated sector

Defined in Schedule 9 Part 1, POCA (includes those who provide the defined services).

relevant professional adviser

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relevant professional adviser

An accountant, auditor or tax adviser who is a member of a professional body which is established for accountants, auditors or tax adviser s (as the case may be); and which makes provision for (a) testing the competence of those seeking admission to membership of such a body as a condition for such admission; and (b) imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

required disclosure

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required disclosure

The identity of the suspect (if known), the information or other matter on which the knowledge or suspicion of money laundering (or reasonable grounds for such) is based and the whereabouts of the laundered property (if known).

S

SAR

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SAR

Suspicious activity report made to SOCA.

SAR glossary of terms

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SAR glossary of terms

Glossary of terms used by SOCA to assist in relating/providing a theme to different SARs to increase effective mining of data by SOCA and Law Enforcement. The use of the terms is not mandatory.

simplified due diligence

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simplified due diligence

The phrase used in the 2007 Regulations (Regulation 13) which means that a business is not required to apply the customer due diligence measures set out in Regulation 7 where the business has reasonable grounds for believing that a client falls into the relevant categories.

SOCA

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SOCA

Serious Organised Crime Agency. SOCA is an intelligence-led agency with law enforcement powers, responsible for reducing the social and individual harm of serious organised crime. Reports of known or suspected money laundering must be made to SOCA.

SOCPA

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SOCPA

Serious Organised Crime and Police Act 2005.

Specified disclosure obligations

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Specified disclosure obligations

See Annex A to the Glossary.

specified interest

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specified interest

A vested interest which is:

in possession or in remainder or reversion (or, in Scotland, in fee); and

defeasible or indefeasible.

A 'vested interest' is an interest which to which an entitlement already exists (whether immediately ? 'in possession'; or in the future, following the ending of another interest ? 'in remainder' or 'in reversion'). It is in contrast to an interest which is merely 'contingent'; a contingent interest is an interest which will only arise on the happening of a particular event, such as surviving to a particular date or surviving a particular person. Determining whether an interest is vested or contingent requires careful analysis. For example, if a trust provides that A has a life interest, and that B has an interest which takes effect on A's death, both A and B will have vested interests and, if B does not survive A, B's interest will devolve as part of B's estate; however, if B's interest is expressed to take effect on A's death only if he (B) is then living, B's interest (which will fail if he predeceases A) is merely contingent.

A defeasible interest is one which may be defeated, generally by the exercise of a power under the trust deed; an indefeasible interest is one which cannot be defeated. In the examples given above, A and B both have indefeasible interests. It is important that a defeasible vested interest is not mistaken for a contingent interest. A defeasible vested interest will take effect unless and until it is defeated; a contingent interest on the other hand will not take effect unless and until the event on which it is contingent arises.

suspicious activity report

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suspicious activity report

Otherwise known as a SAR. See SAR above.

T

TA 2000

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TA 2000

The Terrorism Act 2000 (as amended by the Anti-Terrorism, Crime and Security Act 2001 and the Terrorism Act 2006).

TA 2006

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TA 2006

The Terrorism Act 2006.

tax adviser

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tax adviser

Means a firm or sole practitioner who by way of business provides advice about the tax affairs of other persons, when providing such services (Regulation 3(8), 2007 Regulations ). Tax compliance services, eg, assisting in the completion and submission of tax returns is, for the purpose of this Guidance , included within the term 'advice about the tax affairs of other persons'.

terrorist financing

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terrorist financing

Means an offence under (Regulation 2 2007 Regulations ):

s.15 (fund raising), 16 (use and possession), 17 (funding arrangements), 18 (money laundering) or 63 (terrorist finance: jurisdiction), TA 2000 ;

para 7(2) or (3), Schedule 3 to the Anti-Terrorism, Crime and Security Act 2001(a) (freezing orders);

article 7, 8 or 10 of the Terrorism (United Nations Measures) Order 2006(b); or

article 7, 8 or 10 of the Al-Qaida and Taliban (United Nations Measures) Order 2006(c).

terrorist offences

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terrorist offences

The terrorist offences relate to fundraising (inviting another to provide money or other property with the intention or reasonable cause to suspect it is intended to be used for the purposes of terrorism), using or possessing terrorist funds (receiving or possessing money or other property with the intention or reasonable cause to suspect it is intended to be used for the purposes of terrorism), entering into funding arrangements (making arrangements as a result of which money or other property is or may be made available for the purposes of terrorism with the intention or reasonable cause to suspect it is intended to be used for the purposes of terrorism), money laundering, disclosing information relating to the commission of an offence (similar to tipping off ), or failing to make a disclosure in the regulated sector (ss.19 and 21A TA 2000 (as amended)).

terrorist property

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terrorist property

Means:

money or other property which is likely to be used for the purposes of terrorism (including any resources of a proscribed organisation),

proceeds of the commission of acts of terrorism, and

proceeds of acts carried out for the purposes of terrorism.

tipping off

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tipping off

A 'related' money laundering offence for the regulated sector, defined under s.333A-D, POCA .

transaction

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transaction

The provision of any advice by a business or individual to a client by way of business, or the handling of the client 's finances by way of business.

U

V-Z

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2007 Regulations

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2007 Regulations

Statutory Instrument 2007 no 2157 ? Financial Services 'The Money Laundering Regulations 2007'. [ http://www.opsi.gov.uk/si/si2007/uksi_20072157_en_1].