Money Laundering Update
Money laundering remains a much discussed subject amongst accountants. Jigna Chheda summarises developments since the last issue of In Practice.
The Treasury has finally amended the commencement date for the Money Laundering Regulations 2003 (the Regulations) with the implementation date of 1 March 2004. Members will have received a notification of this via e-mail. ACCA is making further information available online via a new microsite at www.accaglobal.com/moneylaundering. Below I summarise the key technical developments.
Minimum Reporting Threshold
The subject of a minimum reporting threshold was debated extensively during the passage of the Proceeds of Crime Bill, and was rejected by Parliament (mainly because of the poor correlation between the sums laundered and the seriousness of the underlying offences).
The Consultative Committee of Accountancy Bodies (CCAB) is in discussions with a view to becoming a member of the Joint Money Laundering Steering Group (JMLSG). The JMLSGs guidance notes are widely regarded as the leading source of guidance on anti-money laundering practice in the United Kingdom.
The most recent version (December 2001) of the JMLSGs guidance notes has received approval from the Treasury for the purposes of the Act and therefore must be taken into account by courts when considering whether a firm within its scope has committed the failure to report an offence.
It is expected that the guidance notes will also in due course be approved by the Treasury for the purpose of the 2003 Regulations. In the event that CCAB becomes a member of the JMLSG, guidance for accountants will be incorporated into the JMLSG guidance notes. Until then, members of CCAB bodies are not bound to follow the JMLSG guidance notes.
Firms which became subject to failure to report an offence under the Act from 24 February 2003 (that is firms conducting business within the scope of the 1993 Regulations) generally do not need to report knowledge, suspicion or reasonable grounds to suspect money laundering, if the information that gave rise to that knowledge or suspicion came to the firm or the individuals attention before that date. It is expected that a similar transitional provision will be included in any order to implement the 2003 Regulations and any amendment to Schedule 9 of the Act.
This will mean that firms not currently within the regulated sector will only need to report knowledge or suspicions of money laundering if the information that gave rise to that knowledge or suspicion came to the attention of the firm or individuals after the date on which the 2003 Regulations come into effect (a report will also be necessary if the firm or individual will commit one of the main money laundering offences). This will occur on 1 March 2004. Despite the transitional provision outlined above, firms should be aware that they may still be under an obligation to make a report under the TA 2000, or under the 1993 Regulations and the Drug Trafficking Act 1994.
MLROs already appointed by firms on or before 24 February 2003 have a personal obligation, under section 332 of the Act, to report any knowledge or suspicion of money laundering which they have as a result of an internal report, even if they, and the person reporting to them, and/or their firm were not within the scope of the 1993 Regulations. Unless specified below, firms will not need to implement and maintain identification procedures for clients until the date on which the 2003 Regulations come into effect. From that date, firms are obliged to confirm the identity of new clients for relevant business, but not existing clients with whom there is a business relationship.
Firms which are authorised under the FSMA 2000, or are otherwise bound by the 1993 Regulations, have to maintain identification procedures under the 2003 Regulations except in relation to clients with whom a business relationship was formed before 1 April 1994 (reg 30 ). That is the date the outgoing 1993 Regulations took effect.
Jigna Chheda Technical Adviser, ACCA UK