Stephen Hardwick ICB Director of AML Compliance Organised

Stephen Hardwick ICB Director of AML Compliance.

Organised Crime

Organised Crime.

Organised Crime

Organised Crime • First man Al Capone, Gangster, Racketeer, Corruption. Bootlegging, Money Laundering, Convicted of tax evasion. • This man is Achilleas Kallakis he looks like any other professional. Was sentenced to 7 years for conspiracy to defraud, forgery and money laundering. £ 750 million.

Organised Crime Jake “greasy thumb” Guzik Capones Bookkeeper and legal adviser and financial wizard.

National Risk Assessment • Accountancy sector key risks. • Complicit accountancy professionals facilitating Money Laundering. • Professionals who are willfully blind to their money laundering risks. • Criminal exploitation of negligent or unwitting professionals. • National Economic Crime Centre (NECC) recent findings!! • OCG targeting NAÏVE accountancy professionals to engage in money laundering activity.

ICB AML Supervision findings. • • • Some ICB members NAÏVE when it comes to AML Compliance. I don’t have time for all this AML stuff! My kids have been sick! The dogs been sick! My husbands been sick! I’ve been too busy to keep on top of my AML! I’ve got clients to look after! This has been a wake-up call for me! Money laundering doesn’t happen to people like me!! Criminals don’t use small bookkeepers like me!!

National Risk Assessment • Failure to identify suspicion and submit SARs. • UK black economy estimated at 11% GDP in 2017 £ 223 bn (take note) • Annual cost of fraud to the UK £ 193 bn in 2017. • £ 90 bn criminal proceeds laundered in the UK annually. Now Considered a considerable underestimate. • Compare these figures to net NHS spend 2018/19 £ 123 bn. • ICB members submitted around 80 SARs over the past 5 years!!!

ICB AML Supervision • Members not complying with their requirements under MLR 2017, Po. CA 2002. • More practices found to be non-compliant than those found to be compliant in 2018. • Not carrying out client risk assessment on AML online. • Not inputting all or any clients onto AML online. • No policies & procedures in place. • Lack of basic AML knowledge, PEPs, SARs etc. • No staff training!! • Not complying with Regulation 26. • CDD lacking in many, many cases • Horror stories!!

ICB AML Supervision 2020 • New guidance on ICB website. • AML online updated. • New templates • Practice risk assessment template & sample. • 2020 new visiting regime testing adherence with MLR 2017, Po. CA 2002.

Regulation 18 Risk Assessment • First step in AML Compliance. • Must take appropriate steps to identify and assess the risks of money laundering and terrorist financing to which your practice is subject. • Take into account the size and nature of your practice. • Must take into account information provided by ICB and by the NRA, both on ICB website. • Risk assessment template must be used. • There is a sample template which might be of use!! • Will be looked at as part of AML Compliance Inspections.

Risk assessment • MLR requires you to look at your practice : • Clients (complete AML online for each client, job done) • The countries or geographic areas in which you or your customers operate. (are they in places known to be favoured by MLs or known for corruption or poor AML controls, high risk third countries) • Your services (what are the ML risks) • Your transactions (concealing BO, use of nominees) • Delivery channels (non face to face relationships, working through intermediaries)

Risk Assessment

AML Online! • New template on AML online for 2020. • Brings it into line with MLR 2017 and takes account of 5 th EU Directive. • More thorough assessment of your clients AML risk through. • New questions. • Second phase, new templates for Payroll, Self-Assessment Tax. • Comments text box, CDD expiry date/warning. • Option to downgrade risk removed, in certain circumstances!! • Required under ICB rules. • ICB AML risk profiles of its members are formulated from AML online. OPBAS considers this best practice.

Risk Assessment • Crypto currencies an AML Risk, FCA regulated from 2020 Bitcoin, Litecoin, Monero etc. , held it digital wallets. • EU High Risk Third Countries the 23 jurisdictions are: • • • Afghanistan, American Samoa, The Bahamas, Botswana, Democratic People's Republic of Korea, Ethiopia, Ghana, Guam, Iran, Iraq, Libya, Nigeria, Pakistan, Panama, Puerto Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, US Virgin Islands, Yemen.

UK PEP List. • Heads of state, heads of government, ministers and deputy or assistant ministers • Members of Parliament • Members of supreme courts, or constitutional courts or of other high-level judicial bodies whose decisions are not generally subject to further appeal, except in exceptional circumstances • Members of courts of auditors or of the boards of central banks • Ambassadors, chargés d’affairs and high-ranking officers in the armed forces • Members of the administrative, management or supervisory bodies of state-owned enterprises. • PEPs will also include this person's family members and known close associates.

ICB AML Guidance • Regulation 19 MLR 2017– Requires you to establish and maintain policies, controls and procedures to mitigate and manage effectively the risks of money laundering and terrorist financing identified in your practice risk assessment. • Policies and Procedures statement available to download from ICB website which you should use to implement into your practice. • Any staff and sub-contractors must be made aware of your policies and procedures and know where to find a copy.

ICB AML Guidance • Regulation 21 -23 Internal Control. • You must appoint a senior manager to oversee the AML compliance of your practice, if you are a Sole Trader you are responsible by default. • You must also appoint a Nominated officer (MLRO), that is someone responsible for receiving and analysing any internal SAR reports of money laundering from any staff members, and where required, submitting these to the NCA. If you are a Sole Trader, you are responsible by default. • You are required to notify ICB who occupies these roles within 14 days of appointment. If you are a sole trader, you are responsible by default.

ICB AML Guidance • You must ensure that the policies, controls and procedures established to comply with MLR 2017 are effective, are working and then monitor your practice compliance with them. • This should be confirmed annually by completing ICB AML Procedures Annual Review checklist which can be downloaded from the ICB website. • You must also screen your relevant staff to ensure they have the skills, knowledge and expertise to carry out their functions effectively and ensure the conduct and integrity of each individual.

AML Guidance • Regulation 24 Training. • All relevant staff within your practice must receive training on money laundering, and on how to recognise and deal with transactions and other activities or situations which may be related to money laundering. • You are required to keep separate training records for yourself and each member of staff. Training record templates MLR 7 are available to download from the ICB website.

ICB AML Compliance • Regulation 26 ICB as your supervisory authority must approve any person who is a BOOM within a practice, this means that all beneficial owners of a practice (anyone owning over 25% shareholding), any officers which includes directors in any limited company owned practices (even if they are not involved in the running of the practice) and anyone in a management position within a practice including the MLRO. • All BOOMs within a practice must provide documentary proof, usually in the form of a Basic Disclosure Certificate, that they do not have convictions or unspent convictions for an offence specifies in Schedule 3 of the MLR 2017. • Keep practice/staff record up to date on My ICB.

CDD • Not simply obtaining passport and utility bill. • The purpose of CDD is to ensure that you know and understand a client’s identity and business activities so that any money laundering risks can be properly managed. • Who is the client, prove corporate identity. • Beneficial owners, persons with significant control, the Directors so you understand the ownership & control structure. • What, how, who, when, why etc!! • Obtain and assess appropriate information on the intended purpose and nature of the business relationship. • Apply CDD BEFORE you establish a business relationship!!

CDD Ongoing Monitoring • Conduct ongoing monitoring of your client business relationship which involves the scrutiny of client activities and transactions (including enquiries into sources of funds if necessary) to make sure they are consistent with your business’ knowledge and understanding of the client its operations and the associated risks. • You must also undertake reviews of existing records, documents or information obtained for the purpose of applying customer due diligence measures and keep them upto-date.

TCSP • If you are doing any of the following, you must inform ICB who will place you on the TCSP list maintained by HMRC. • Forming companies for your clients. • Acting as a nominee director/shareholder. • Acting as registered office. • Act or arrange for another person to act as a director or secretary of a company. • Act as a partner (or in a similar position) for other legal persons. • Trustee of an express trust or similar legal arrangement.

AML National Picture • • • FATF UK MER. OPBAS SAR Transformation project Companies House NECC JMLIT ECONOMIC CRIME PLAN Public Private Partnership. ISEWG.

AML National Picture • • • AMLSF AAG EU 5 th ML Directive EU 6 th ML Directive Revised MLR by 2021. Etc!!

National Risk Assessment 2017 Creation of companies Acting as nominee director/shareholder, Acting as registered office for the client. Tax evasion Signing off accounts for criminal groups (Adding an air of legitimacy to otherwise dodgy accounts) • Failure to report suspicion of money laundering (Submitting SARs) • • •

How ICB Bookkeepers can ensure crime doesn’t PAY!!! • Take your Anti-Money Laundering responsibilities seriously, understand what money laundering is, train staff etc. • Senior management responsibility for compliance, vet staff, Is your AML compliance working? Annual check!! • Risk assess your practice to determine the AML risks you are exposed to. • Put policies and procedures in place to mitigate these risks and ensure any staff are aware. • Apply appropriate due diligence measures on your clients to ensure you identify the Beneficial Ownership, Persons with Significant Control, Directors etc. • Understand what they do, how they operate, work, structure and what services you are providing.

How can Accountants ensure crime doesn’t PAY!!! • Ongoing monitoring of the business relationship-is all as you expected? If not, WHY? Challenge!! • Report any suspicions of money laundering to the NCA through the SARS Regime!! • This is how accountants can ensure Crime doesn’t PAY!!

The End Any Questions