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The 8 steps to MLR compliance

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18th Jun 2012
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Accountancy service providers can now follow eight simple steps to ensure they are on the right track to being compliant with the money laundering regulations, as outlined by the Anti-Money Laundering Compliance Company’s Stephen Watts.

Speaking at an ICPA seminar in Bristol last week, Watts ran through what had changed since the previous legislation and outlined the ‘eight steps to compliance’.

The Money Laundering Regulations (MLR) 2007 came into force on 15 December 2007 and there are changes accountants should be aware of.

Following the previous legislation two key areas have come up: the first is around client identification procedures which now includes customer due diligence and a risk-based approach.

The other major change involves being supervised for compliance, which essentially means it is now a requirement to be regulated by a recognised body.

Watts explained the importance of getting clear procedures in place: “If you adopt these eight steps you’ll be going on the right track to compliance.

“The MLR 2007 have been in place for over four years now so there really is no excuse for not being aware of them and not being compliant. However compliance doesn’t have to be too time-consuming. Get these things in place and you’ll be on your way.”

Here they are:

  1. Appoint an MLRO (Money Laundering Reporting Officer) – this carries significant responsibility and should be undertaken by an appropriately experienced individual. MLROs will be expected to consider internal reports, decide if there are sufficient grounds for a suspicious activity report (SAR), and act as a liaison point with SOCA
  2. Provide a compliance manual – this reference tool includes information on best practice and a policy statement which everyone should sign to acknowledge their awareness
  3. Training – there is a requirement within the regulations to train all ‘relevant’ employees and it is best practice to train all client-facing staff. Training should be conducted on an annual basis
  4. Verify clients – client verifications are only part of customer due diligence. You have to identify and verify your clients. This can be done manually or electronically.  It’s also important to establish where the control lies and who the beneficial owners are
  5. Risk based approach – accountants need to understand the risk their clients pose, which is part of customer due diligence. It’s important here to ascertain as much information as possible. Be aware that with high risk clients, you will need to take measures to mitigate this risk
  6. Reporting – clear reporting procedures need to be in place, both internally and externally: staff to MLRO and MLRO to SOCA. It is an offence for individuals failing to report where they have knowledge or suspicion and reasonable grounds for suspicion. If you report a client just be aware of the offence of ‘tipping off’. Importantly if you decide not to make a report then ensure you have something on file to support this decision
  7. Record keeping – you’ll need to keep records of training, risk assessments, internal and external reports and verifications
  8. Be supervised – ensure you are being supervised for compliance by a recognised Supervisory Body. Contact your professional body if you are unsure. You’ll be committing an offence if the business is not registered

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