Monday, August 7, 2017

AML and Me and You

Kerry Kendal at Intapp sends an excellent summary of new AML rules that recently went into effect:

The 2017 Money Laundering and Terrorist Financing Regulations came into force in the UK in June. As law firms in the UK await the release of a guidance note from treasury, the Law Society has provided a summary of the key changes and suggested interim measures on their website as detailed below:  
The 9 key changes for UK firms:
  1. New requirement to have written risk assessments for each new client
  2. Revised reporting, record keeping and monitoring processes are now required
  3. Group level and internal controls - firms which are parent undertakings will be required to apply their policies, controls, and procedures to their subsidiaries and branches in the UK and overseas
  4. The circumstances in which simplified customer due diligence (CDD) is permissible will become more restricted - in a significant departure from the Money Laundering Regulations 2007 'automatic' simplified due diligence for certain transactions will end
  5. Enhanced due diligence- another major change is the creation of a list of high risk jurisdictions which, if involved in a transaction, will make enhanced due diligence (EDD) and additional risk assessment compulsory
  6. The definition of PEPs will now also apply to local and domestic individuals occupying prominent public positions
  7. Firms are required to undertake regular training to relevant employees and agents is crucial to ensure they are made aware of the law relating to money laundering, terrorist financing and data protection
  8. Corporate bodies and other legal entities will be required to maintain accurate and current information on their beneficial ownership
  9. Firms will be required to retain records of CDD documents and supporting evidence for at least five years after the end of the business relationship or occasional transaction. At the end of five years, there is a requirement to delete personal data (unless express consent is given to retain that data) or if the firm is otherwise required to retain the personal data (i.e. for the purposes of court proceedings).
The Law Society recommend that firms take the following steps in the interim:
  1. Initiate and document a risk-based assessment of money laundering
  2. Train staff on how to access the beneficial ownership registry
  3. Update policies and procedures to reflect the changes
  4. Add an audit function to test procedures
  5. Review all new policies by senior management

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