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Practice advice Q&As: January 2021
Our dedicated team of solicitors on the anti-money laundering helpline has been advising on anti-money laundering for over a decade. We can help answer enquiries around:
- customer due diligence
- source of funds
We can also help you navigate the Legal Sector Affinity Group (LSAG) anti-money laundering guidance for the legal sector.
The service operates Monday to Friday 9am to 5pm and you can call us on 020 7320 9544.
Here is a selection of questions and answers on some popular topics compiled by the Practice Advice Service:
Can I withdraw a suspicious activity report (SAR) I made yesterday to the National Crime Agency (NCA)? New information has now removed all suspicion.
During the notice period, where the funds subject to the disclosure remain under your control, and prior to any response from the NCA, if you no longer wish the NCA to consider your request for a defence against money-laundering (‘DAML’), then such a request can be withdrawn in writing by email to DAML@nca.gov.uk.
The NCA will retain the information disclosed for intelligence purposes.
For further information, see the NCA’s frequently asked questions.
I've received initial instructions to act for a buyer in a complex conveyancing transaction where there are a number of high-risk factors and where the source of funds evidence supplied by the client to date has raised suspicions of criminality. I intend to end the retainer on the basis that the matter is high-risk for the firm. Upon terminating the retainer, am I still obligated to make a SAR to the NCA?
Persons in the regulated sector are required under Part 7 of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT) to submit a SAR in respect of information that comes to them in the course of their business if they know, or suspect or have reasonable grounds for knowing or suspecting, that a person is engaged in, or attempting, money laundering or terrorist financing.
The failure to disclose offences carry a maximum penalty of five years' imprisonment, a fine or both.
Irrespective of whether you end the retainer or not, in order to avail yourself of a defence under section 330 of POCA, you must make an internal SAR to your money laundering reporting officer (MLRO) as soon as practicable on forming knowledge or suspicion of money laundering where this points to:
- knowledge of the identity of the launderer or the whereabouts of the criminal property, or
- a belief that the information on which the suspicion is based may help to identify the launderer or the whereabouts of criminal property
As to what constitutes suspicion, see chapter 16.7 of the LSAG anti-money laundering guidance. If you're unsure you have such a suspicion, you should promptly seek guidance from your MLRO.
Your MLRO should consider the information and decide whether a SAR under section 331 of POCA should be submitted.
If the MLRO decides not to submit a SAR, for example, because the information does not meet the threshold for suspicion, or is subject to privilege or an exception applies, your MLRO should make sure they have documented the reasons for their decision and keep records of this along with the original internal disclosure to demonstrate compliance with these obligations.
For more information, see the anti-money laundering guidance for the legal sector.
I act for the buyer in a conveyancing transaction. Due to COVID-19, the client is unable to attend our offices and I will be taking instructions on a non-face-to-face basis. What electronic identification and verification (‘EID&V’) methods could we use to assist with our customer due diligence?
As an alternative to face-to-face identification and verification you may utilise EID&V where this is appropriate to the risks present in the transaction or the client’s profile.
Such methods may include:
- digital EID&V services that meet the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Reg. 28(19) – "secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is in fact the person with that identity"
- gathering and analysing additional data to triangulate the evidence provided by the client, such as geolocation, internet protocol (IP) addresses, verifiable phone numbers, etc.
- verifying phone numbers, emails and/or physical addresses by sending codes to the client’s address to validate access to accounts
- using live and/or recorded digital video (many reliable and free options exist for this) of the customer showing their face and original photo identification documents so that you can compare them to a scanned copy of the same document (for example, a passport or a driving licence).
For more information, see the LSAG advisory note: COVID-19 and preventing money laundering and terrorist financing in legal practices and chapter 7.6 of the anti-money laundering guidance for the legal sector.