Anti-money laundering
Amendments to practice note - 29 October 2009
Chapter 1
Re-formatted to follow standard Law Society practice notes
- a re-draft of the status of the practice note
- insertion of new 1.6 on Terminology which is consistent with other Law Society practice notes
- more detail on other Law Society services.
1.4.5
- Definition of independent legal professional amended to mirror the regulations
List of activities not covered by the regulations
- Publicly funded work changed to work funded by the Legal Services Commission
Working elsewhere in the regulated sector
- Added: and tax compliance work
Chapter 2 No change
Chapter 3
3.7 Disclosures
- Clarifies that it is only sole practitioners with no other staff who are not required to have a system for disclosures
3.9 and 3.9.3 Training
- The requirement to ‘provide training’ is changed to ‘give training’ to mirror the wording in the regulations
3.9.1 Defences
• Clarifies that the defence of a lack of training only applies if there is not actual knowledge or suspicion of money laundering
Chapter 4
4.3.4 Reliance in the UK
- Added that the supervisory authority must be listed in Part 1 of Schedule 3 of the regulations
Reliance in other countries
- Inclusion of the requirement for equivalent law to that of the third directive
- Inclusion of HM Treasury’s equivalence list and updating of reference to JMLSG’s equivalence guidance
4.6.3 Public overseas companies
- Inclusion of HM Treasury’s equivalence list and updating of reference to JMLSG’s equivalence guidance
4.6.4 Foundations
- Added that the assurances are for the purpose of verifying the identity of the persons involved in the foundation
Charities
- Changed link from Bank of England sanctions list to the HM Treasury consolidated list
Clubs and associations
- Included a verification option of financial statements presented to the AGM, on the basis that many clubs do not need to have their financial statements audited.
4.6.5 Government agencies and councils
• Added that some non-UK public authorities may qualify for simplified due diligence with a cross reference to 4.8.2
4.8.2 Who qualifies for simplified due diligence
- Use of the word ‘equivalent’ rather than ‘similar’
- Incorporates the disclosure requirements as set out in the regulations
- In relation to products, further definition of what is a regulated credit institution
- Inclusion of HM Treasury’s equivalence list and updating of reference to JMLSG’s equivalence guidance
4.9.2 Who is a PEP?
- Amended the definition to more clearly reflect the regulations
- Specifically include that middle ranking and junior officials are not PEPs.
4.9.3 Higher risk of money laundering
- Added new section highlighting HM Treasury’s notification of higher risk jurisdictions
4.11 FATF counter measures and financial sanctions
- New section added in line with advice from the Asset Freezing Unit
5.4.1 General comments
- Deleted repeated sentence in the third paragraph
Chapter 5
5.5.1 Authorised disclosures
- Amended first bullet point to more accurately reflect the wording of section 338
Reasonable excuse defence
- Clarified the relationship between authorised disclosures and legal professional privilege as a reasonable excuse
5.6.1 Failure to disclose offences
- Added a reference to ‘reasonable belief’ regarding whether the information would assist in identifying money laundering, to more accurately reflect the legislation.
5.7 Privileged circumstances
- Included a reference to relevant professional advisor to more accurately reflect the legislation.
5.7.1 Reasonable excuse
Replacement of the words privileged circumstances to subject to legal professional privilege – to avoid confusion between the two concepts.
Clarified the relationship between authorised disclosures and legal professional privilege as a reasonable excuse.
5.7.2 Privileged circumstances
- Added in link to CPS guidance
- Included reference to relevant professional to more accurately reflect the legislation
5.8.2.2.1 Professional legal adviser exemption
- Clarified that the crime / fraud exemption applies
Chapter 6
6.4.1 General overview
• Removes reference to accountants on the basis that this advice is only for the legal profession.
6.5 Privileged circumstances
- Amendment of the sections to which this defence applies
- Clarified who this defence applies to
- Removal of commentary on the definition of representative
- Deleted discussion of the offence of prejudicing an investigation and the different sectors.
6.6.1 Protection of advice
- Clarified the definition of representative and who the communication may be between
6.6.2 Losing protection by dissemination
- Second paragraph amended to enhance clarity.
Chapter 7
7.5.2 Regulated sector
- Added knows or suspects to more accurately reflect the legislation
7.8.1 Disclosures within an undertaking
- Amended to more accurately reflect the legislation
7.8.3 Professional legal advisers
Clarified that the exception and the offence in section 21D only apply to the regulated sector.
7.9
- Old 7.10 making enquiries of clients moved up to 7.9
7.10 Other terrorist offences
- Old 7.9 replaced with a new section in relation to offences under asset freezing orders
Chapter 8
8.3.3 When?
- Amended to more accurately reflect the legislation
- Removal of the broad statement about making a report before ascertaining who your client is. For some of the offences a retainer in the regulated sector will need to be in place before the requirement to report applies. That is a matter of applying the elements of each offence and defence as outlined in the previous chapters.
8.3.5 Forms
- Removal of reference to the proscribed form
8.3.9 Confidentiality
- Adds advice to contact police if there is an immediate fear for personal safety following the making of a SAR
8.4 SARs feedback
- Amending the name of the Law Society’s AML newsletter
Chapter 9
9.2.2 Other supervisors
- Amending the Law Society’s web address
9.3.3 Disciplinary Action
- Amending opening hours of SRA ethics helpline
9.4.3 Regulations – table of offences
- Inclusion of 10(1), 20 (4) and (5) for completeness
Chapter 10
10.6 Notifying your insurer
Added in a section on tipping off risks when talking with insurers. Consistent with earlier advice on tipping off and the Mortgage Fraud practice note.
Chapter 11
11.2.4 Suspect territory
- Included HM Treasury’s list of jurisdictions posing a higher risk of money laundering
- Included the HM Treasury consolidate list
11.3.3 Charities
- Changed link from Bank of England sanctions list to the HM Treasury consolidated list
11.4.2 Direct payments between buyers and sellers
- Changed from tax avoidance to tax evasion
11.4.4 Lender issues
- Cross reference to Mortgage Fraud Practice Note
Legal professional privilege
- Amended in line with the Mortgage Fraud Practice Note
- Amended in line with the Mortgage Fraud Practice Note