Guidance on the prevention of money laundering and the countering of terrorist financing.
Issued by the Consultative Committee of Accountancy Bodies in August 2008.
Guidance for those providing audit, accountancy, tax advisory, insolvency or related services in the United Kingdom (including such firms providing trust or company services) on the prevention of money laundering and the countering of terrorist financing.
It replaces the previous Handbook section 7.2 and technical releases issued in October 2007 (Tech 05/07) and December 2007 (Tech 07/07).
The Guidance is addressed to all entities providing audit, accountancy, tax, insolvency or related services in the United Kingdom by way of business, irrespective of membership of a recognised professional body. We hope that this will promote consistency of compliance with requirements, both between competing firms and where work is sub-contracted from one firm to another. The Guidance should also be followed by any accountancy firm which also provides trust or company services within the meaning of the Money Laundering Regulations 2007 (the 2007 Regulations).
The Guidance has been approved by Treasury (approval granted in July 2008 - Appendix A - Supplementary guidance for the Tax Practitioner approved June 2009). This means that courts must take it into account when determining whether an accountant's conduct gives rise to certain offences under anti-money laundering legislation. It will also be taken into account in relevant professional disciplinary enquiries.
This Guidance is also available as a downloadable PDF - TECH 04/08 Anti-money laundering guidance for the accountancy sector
PO Box 433 Chartered Accountants' Hall
Moorgate Place, London EC2P 2BJ
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Facsimile: 020 7628 1874
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 Accountant
The Chartered Institute of Public Finance and Accountancy
The Anti-Money Laundering Guidance for the Accountancy Sector has been approved by Treasury (excluding Appendix A - Supplementary guidance for the Tax Practitioner, which has been submitted for Treasury approval separately). Guidance which is approved by Treasury is 'relevant guidance' within the meaning of the Money Laundering Regulations 2007. Courts must consider relevant guidance when determining whether an accountant's conduct gives rise to certain offences under either the Proceeds of Crime Act 2002 or the Money Laundering Regulations 2007. It is this Guidance which practitioners should consider as authoritative when implementing and complying with anti-money laundering requirements.
The Guidance provides the accountancy sector with not only an interpretation of the requirements of the Money Laundering Regulations 2007 (which became effective from 15th December 2007) and primary legislation relating to money laundering and terrorist financing but also practical guidance on good practice for matters not prescribed in law.
This Guidance includes a number of minor changes made since the Guidance was issued in December 2007 (following the publication of an exposure draft in October 2007).
The Guidance reflects not only law but the experience of practitioners. For more complex areas of customer due diligence, our Guidance continues to be cross referred to the guidance notes issued by the Joint Money Laundering Steering Group. However, it is intended that, at least for most smaller practitioners, the Guidance will be self contained and the need to refer to additional external material will be minimal.
To aid easy access, use is made of defined terms explained in a glossary and each section is prefaced with key points for quick reference.
Businesses and Individuals within the scope of this guidance
Role of Supervisory authorities
Legal requirements and status of this guidance
What is money laundering?
Money laundering offences
Offences of failure to disclose
- Required disclosure
- Defences and exemptions
Prejudicing an investigation
Knowledge and suspicion
- Is it knowledge or suspicion?
- Reasonable grounds for knowledge or suspicion
Non-compliance with money laundering regulations
3 Systems and controls
Systems and controls
- Reporting procedures
- Communications and training
Risk assessment and management
- Policies and procedures
- Risk profile
- Managing compliance
The risk-based approach
- Developing and applying a risk-based approach
Customer due diligence
- Why this is important
- What is the meaning of customer due diligence?
- What is a beneficial owner?
Application and timing of customer due diligence
- When delay may be acceptable
- Non compliance (client refusal)
- Continuing client due diligence
The risk-based approach to client due diligence
- Simplified due diligence
- Enhanced due diligence
- Politically exposed persons (PEPs)
- Prohibited relationships
- Reliance on third parties
Conducting customer due diligence
- Know your client (KYC)
- Specific customer due diligence prompts
- On-going monitoring
- Risk-based verification
- Documentary evidence used in the verification of identity
Certification and annotation
- Electronic identification
- Insolvency cases
5A - specific prompts for clients
- For entities/businesses
- For individuals
5B - examples of risked-based verification
What must be reported?
Types of report
- The protected disclosure
- The authorised disclosure
- Confidentiality protection
- Non-POCA reporting
Recognising money laundering
- The key elements
- Criminal conduct
- Criminal property
- Determining whether and when to report
How to report
- Internal Reports to the MLRO
- Reports to SOCA
Assessing internal reports
- The reporting record
Making external reports
- Guarding confidentiality
The privilege reporting exemption
- Legal advice
- Examples of privileged circumstances
- Recording and discussion with the MLRO
- The crime/fraud exception
- Matters for consent
- Constructive trust
- Suspension of activity
- Applying for and receiving consent
- Refusal of consent
- Exemptions for banks and deposit takers
9 Post SAR actions
Post SAR actions
Continuing work in connection with a reported matter
- Client relationships
- Balancing professional work and POCA requirements
Requests for further information
- Request from SOCA or law enforcement agencies
- Requests arising from a change in professional appointment
Data protection act - subject access requests
Glossaries and appendices
- Annex A - The specified disclosure obligations
- Annex B - HM Treasury consolidated list of persons designated as being subject to financial restrictions
Appendix A - Supplementary guidance
1. About this supplementary guidance
2. How to use this supplementary guidance
3. Tax practitioners, MLR 2007 and POCA
4. Overview of the tax sector
5. What are the money laundering risks in the tax sector?
6. Tax offences
7. Reluctance to correct past errors
8. Intention to underpay tax
9. Tax evasion
10. Failure to obtain Treasury consent - s.765 ICTA
11. Indirect tax
12. The privilege reporting exemption
13. Customer due diligence (CDD)
Appendix 1 Money Laundering and disclosures to HMRC
Appendix 2 Examples of when the privilege reporting exemption might apply
Appendix 3 Examples of when the privilege reporting exemption is unlikely to apply