Money laundering

Money laundering

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Does anybody know the exact requirements re pre Dec 2007 clients - do we have to contact them all and get driving licences etc etc?
IR

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By User deleted
13th Mar 2009 13:22

No, not obtained dishonestly
Just an proper repayment due to a construction industry worker who had a lot of CIS tax deducted during the year.

I misunderstood your earlier posts and thought maybe we had to inform SOCA of ALL monies we handled on behalf of a client.

Thanks for clearing that up for me.

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By User deleted
12th Mar 2009 12:32

thank you David
David I am most grateful for your detailed advice.
I am now going to spend the afternoon getting the files together so that I can sleep to-night.
many thanks

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David Winch
By David Winch
13th Mar 2009 12:15

Refund obtained dishonestly?

T

Are you saying the refund has been obtained dishonestly?

If the refund has been obtained fraudulently then it is a 'benefit' of that fraud and (if you suspect that to be the case) then the refund is 'criminal property'. In receiving the refund, banking it and forwarding part of it to the client you would be 'transferring criminal property' which is a money laundering offence unless you have consent from SOCA to do it. So, yes you would need to seek consent from SOCA for this.

If, on the other hand, the refund has been obtained honestly then it is not a 'benefit' of fraud (or any other crime) and so is not 'criminal property'. If it is not criminal property you can handle it without needing consent from SOCA.

David

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By User deleted
13th Mar 2009 11:13

Handling Clients Money
If the client is due a repayment from HMRC and we get authority to have the repayment made to our account, take off what we are owed by the client, and forward the balance to their account, does this constitute handling clients money (I assume so) and would we have to have permission from SOCA for this - even thought the money is coming from HMRC themselves?

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David Winch
By David Winch
11th Mar 2009 17:25

Other things

Anon

Aside from ID procedures, you do need some system for broadly assessing money laundering risk for each client which will reflect both the type of client they are and the type of services you are supplying to them (a simple matrix will do the job fine).

You also need a set of anti-money laundering policies and procedures with which your firm complies (including staff training) and a named MLRO.

Of course you need to report suspicions of money laundering or terrorist property offences to SOCA.

If you handle clients' money or assets then you need to be aware of the risk of committing a money laundering offence yourself and how to avoid that (principally by seeking consent from SOCA when the danger arises).

In my view the greatest dangers in terms of seriousness are (most serious first):

1. Handling clients' money or assets which prove to be 'criminal property' without obtaining consent from SOCA;

2. Failing to report to SOCA where there are reasonable grounds for suspicion;

3. Failing to appropriately verify ID;

4. Breach of some other requirement of the ML Regulations (e.g. failure to train staff, etc).

Fortunately the frequency of occurrence of these failures is probably in the opposite order to their seriousness (i.e. number 4 is much more common than number 1). Insolvency practitioners are probably the worst offenders in relation to item 1 - they are forever scooping up assets which may be tainted by criminality of one sort or another without obtaining consent from SOCA.

David
www.MLROsupport.co.uk

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David Winch
By David Winch
11th Mar 2009 17:23

Longstanding clients

Anon

You have various options.

One is basically to do nothing about complying with the letter of the MLR on the basis that you may well retire before you get an inspection of your compliance, you are satisfied that you know the ID of your clients and that they are low risk, and - if you do get inspected - you will be able to 'get away' with any non-compliance by promising to sort it out and then retiring! I would not recommend this approach - but you may find it cost effective!

Another option (perhaps at the other end of the scale) is to obtain electronic confirmation of the ID of all your clients, print out copies of those confirmations, and retain them in a file somewhere. This will cost a few pounds per client. Almost inevitably some clients will not 'pass' the electronic check and, if you are doing things properly, you will need to employ alternative procedures to verify the ID of those clients.

Another option (perhaps the halfway house) is to review your existing files for copies (taken by yourself or your staff) of documents which, in effect, confirm the client's ID. These would include, for example, copies of the client's bank statements (showing name and address), copies of VAT or tax returns issued to the client in the post (not forms generated electronically), copies of utility bills, etc. When you find such documents, take a further copy of them and file those copies in your records of ID confirmations. Where you have insufficient documents for a particular client, then take alternative steps (such as an electronic check or asking the client to produce ID documents, such as a passport).

You need to ensure that where the client is, for example, a limited company that you have ID in relation to the company itself and in relation to holders of a 'beneficial interest' (normally a shareholding of more than 25%). The obvious route for companies is by a simple check at Companies House which you can do online (do check your client company is not struck off / dissolved or in liquidation!). If the 'beneficial owners' are also clients as individuals, then you will have ID for them as individuals (you do not then need yet more documentation in relation to them in view of their 'beneficial interest').

David
www.MLROsupport.co.uk

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By User deleted
11th Mar 2009 13:43

David what is required
David as always you give clear answers and I think that you are correct that many of us
who have had clients for 20 years or so consider that they have enough id. I have visited their homes numerous times, corresponded with tax, seen utilitiy bills etc etc.
What is the minimum amount of checks that I now need to do to comply with the regulations. I do standard checks for new clients but it is the existing ones that confuse me.
I would point out that I am 104 years old (or it seems like that when I think about MLR).
and intend to retire within the next two years.
Many thanks

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David Winch
By David Winch
10th Mar 2009 16:29

Continuing clients

If you are an accountant / tax adviser / auditor / book-keeper charging fees to clients for these services then you have been obliged since 1 March 2004 to obtain ID for new clients as and when you took them on.

As from 15 December 2007 you are obliged to carry out 'customer due diligence' for all clients, including those you have had since before March 2004, and this includes both obtaining ID and 'ongoing monitoring'.

However you are not required to obtain ID from all your pre-March 2004 clients immediately - you should do it at the next appropriate opportunity. That might be next time you meet them, say, to complete set of accounts or tax return. There is no fixed deadline date for you to have obtained ID from all the clients you have who first came to you before March 2004.

In practice many accountants / tax advisers / book-keepers were not subject to external supervision of their compliance with the money laundering regulations until this year - and have ignored the ID requirements until now!

David

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