1. Anti-money laundering
Adviser Refresher Training

2. Introduction
The purpose of this presentation is to provide you with Anti-Money Laundering (‘AML’) refresher training ahead of completion of an online Worksmart AML test as part of your ongoing competency assessment. This needs to be done along with information on the extranet site.

3. Content Money Laundering - What? Why? How? Terrorist Financing
The laws, regulations & guidance
Our AML procedures
MLRO responsibilities
AML, your role and your responsibilities
What happens next?

4. Why do you need training?
Money Laundering Regulations 2007 s21 state:
A relevant person must take appropriate measures
so that all relevant individuals are:
(a) made aware of the law relating to money laundering and terrorist financing; and
(b) regularly given training in how to recognise and deal with transactions and other activities which may be related to money laundering or terrorist financing.

5. Why do you need training?
FCA rules state appropriate training must be regularly provided
Training defence under Proceeds of Crime Act: if you’ve not been trained you may not know how to report
Refresh knowledge = increased awareness

6. What is Money Laundering?

7. What is Money Laundering?
Money laundering occurs every time any
transaction takes place or any
relationship is formed that involves any
form of property that has come from any crime.
UNDERSTANDING THIS IS IMPORTANT

8. What is Money Laundering?
Money laundering occurs every time any
transaction takes place or any
relationship is formed that involves any
form of property that has come from any crime.
UNDERSTANDING THIS IS IMPORTANT

9. What is Money Laundering?
Any transaction
Any relationship
Involves any form of property
Any crime
Following the introduction of the Proceeds of Crime Act, Money Laundering is not now just about cleaning or hiding ‘dirty’ cash.

10. What is Money Laundering?
Example:
Person A steals a laptop from Person B
In anticipation of a police investigation Person A gives the laptop to a friend (Person C) to hide until the “coast is clear”
Person C takes the laptop and hides it in a in the wardrobe
Is Person C money laundering?

11. What is Money Laundering?
Person A giving laptop to Person C
Any transaction (concealing)
Friends
Any relationship
Laptop
Involves any form of property
Theft
Any crime

12. What is Money Laundering?
Therefore, yes, this is an example of Money Laundering
As would be benefit fraud, tax evasion and any other offences or crimes involving any type of ‘property’.

13. What is Money Laundering?
Any transaction (for example):
Lump sum Investment
House purchase deposit
A direct debit payment
Bank transfers/deposits
Purchase of high value goods (cars, antiques)
Money Transfers

14. What is Money Laundering?
Any relationship (e.g.)
Professional (Bank, Accountant, Solicitor, Financial/Mortgage Adviser)
Friends and family
‘Bloke in the pub’
Work colleagues
Company or Organisation (Public or Private)

15. What is Money Laundering?
Involves any form of property
‘Cash’ including money in a bank account
Postal Orders, travellers cheques, money orders
Assets (Houses, cars, antiques)
Any item that has a value

16. What is Money Laundering?
Any crime
All conduct which constitutes an offence in any part of the UK or
overseas conduct which could have amounted to an offence if it had taken place here.
No de minimis (minimum) limit

17. Why is money laundered?

18. Why is money laundered?
Disguise the fact that their property comes from a crime and if possible to make it look as if it comes from a legal source
Conceal it and to put distance between themselves and any asset to throw police off their track
To keep control of the property but avoid detection
To benefit from the proceeds of crime

19. Why is money laundered?
Consider an individual who has lied on a child tax credit application about their income or an individual who has not fully declared all income
Would they consider themselves as money launderers?
Probably not, but under the Proceeds of Crime Act – they are.

20. How is Money Laundered?

21. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to

22. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement –

23. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement – depositing proceeds of crime

24. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement – depositing proceeds of crime
Layering –

25. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement – depositing proceeds of crime
Layering – transactions to disguise/confuse

26. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement – depositing proceeds of crime
Layering – transactions to disguise/confuse
Integration –

27. The traditional teaching in the past will have referred to
How is money laundered?
The traditional teaching in the past will have referred to
placement, layering and integration
Placement – depositing proceeds of crime
Layering – transactions to disguise/confuse
Integration – property returned to legitimate economy

28. How is money laundered? Placement – Split deposits
Smurfing – the use of other individuals to pay various split deposits
Use of monetary instruments e.g. bonds, mortgages
Intermingling with legitimate income
Asset purchases

29. Layering – Integration – How is money laundered? Complex arrangements
Overseas transactions
Trusts
Ownership of different companies
Integration –
Sale or redemption of property/finances
Sham transactions or businesses

30. The following is an example of this.
How is money laundered?
The traditional model of money laundering is useful but does not adequately explain a host of situations where the activity does not fit the placement, layering and integration process.
The following is an example of this.

31. How is money laundered?
Mr X is an insider dealer who having received inside information sells stock prematurely in order to avoid a loss
The benefit from this crime is that he avoided a loss of £10,000
The proceeds from this premature sale are in his bank account earning interest

32. How is money laundered?
In this example there is a transaction (selling the shares), relationship (between Mr X and his bank), property (money in the bank account) and a crime (insider dealing)
Therefore money laundering offences have been committed without placement, layering or integration.

33. Review
Money Laundering involves:
Any

34. Review
Money Laundering involves:
Any transaction

35. Review
Money Laundering involves:
Any transaction
Any

36. Review
Money Laundering involves:
Any transaction
Any relationship

37. Review Money Laundering involves: Any transaction Any relationship
Involves any form of

38. Review Money Laundering involves: Any transaction Any relationship
Involves any form of property

39. Review Money Laundering involves: Any transaction Any relationship
Involves any form of property
Any

40. Review Money Laundering involves: Any transaction Any relationship
Involves any form of property
Any crime

41. Review Money is laundered to: Disguise Conceal/distance
Keep control / avoid detection
Benefit from the proceeds of crime

42. Review
Money is laundered through:
Placement
Layering
Integration

43. Review Don’t get distracted by the 3 stage process
It is not necessary to have any part of this process in order to commit a money laundering offence

44. Terrorist Financing

45. Terrorist Financing
Using criminal proceeds to wholly or partly finance terrorist activity
Even if source of funds are legitimate there will be a need to disguise it to avoid detection and to preserve future funding
Many techniques used to disguise terrorist funding will be the same as those used for money laundering

46. Terrorist Financing
The main difference is the purpose of the funds and the way in which the benefits will be used.
Could also be legitimate funds – e.g. salary / income
HM Treasury Sanctions List of Frozen Assets is monitored through an electronic system

47. Terrorist Financing
You need to be equally aware of possible Terrorist Financing suspicions especially as these could involve legitimate funds

48. The laws, regulations & guidance
UK Anti-Money Laundering (AML) framework comprises of:
Primary legislation
Secondary legislation
Industry Guidance
Regulator/Supervisory Rules / enforcement

49. The laws, regulations & guidance
Primary legislation
Proceeds of Crime Act 2002
Terrorism Act 2000/2006
Financial Services & Markets Act 2000
These are the Acts or Laws that contain the criminal offences relating to money
laundering and terrorist financing

50. The laws, regulations & guidance
Secondary legislation
Money Laundering Regulations 2007
Industry Guidance
Joint Money Laundering Steering Group (JMLSG)

51. The laws, regulations & guidance
Regulators / Supervisors include:
FCA Systems and Controls rules
Office of Fair Trading (Estate Agents)
Law Society (Solicitors)
HMRC (High value goods dealers e.g. antique dealers)
Gambling Commission (Casinos)

52. The laws, regulations & guidance
International influence
Financial Action Task Force (FATF) monitor and make recommendations on an international scale
These recommendations are then adopted through EU and UK law and regulations.

53. Proceeds of Crime Act 2002
The are 3 major categories of money laundering offence:
Substantive (main) offences (s )
Failing to report (s330)
Tipping off (s333)

54. Main offences (s327-329) POCA s327 POCA s328 POCA s329
Concealing, disguising, converting or transferring criminal property
POCA s328
Entering into or becoming concerned in an arrangement
POCA s329
Acquiring, using or having possession of criminal property

55. Main offences (s327-329) POCA s328
Entering into or becoming concerned in an arrangement
This is the main offence that Intrinsic and it’s advisers need to protect against through good money laundering processes, knowledge and awareness
Main offences (s )

56. Failing to report (s330) A person will commit an offence if each of
the following conditions is satisfied:
Knows or suspects, or has reasonable grounds for knowing or suspecting that another person is engaged with money laundering
Failing to report (s330)

57. Failing to report (s330) A person will commit an offence if each of
the following conditions is satisfied:
The information on which this knowledge or suspicion is based came in the course of a business in the regulated sector (e.g. in their role as an adviser)

58. Failing to report (s330)
A person will commit an offence if each of the following conditions is satisfied:
Do not make the required disclosure as soon as they are able to after the information became available

59. Failing to report (s330) Knowing or suspecting or having reasonable
grounds for knowing or suspecting

60. Knowledge Knowledge is considered as:
You may definitely know some facts
It’s still knowledge if you turn a blind eye
Fail to make enough enquiries to satisfy yourself that there are no grounds for suspicion

61. Suspicion
What will appear suspicious to one person may appear to be innocuous
to another.
The suspicion ‘spectrum’ on the next page shows the process of reaching
a suspicion.

62. Suspicion
Curiosity

63. Suspicion
Curiosity
Unease

64. Suspicion
Curiosity
Unease
Concern

65. Suspicion
Curiosity
Unease
Concern
Suspicion

66. Suspicion
Curiosity
Unease
Concern
Suspicion
Knowledge

67. Suspicion
You need to determine what you feel about the transaction or information and if you progress to ‘suspicion’, you need to make a report
If you are curious, uneasy or concerned make enough enquiries to ensure your gut-feel has no basis or if you then actually have a suspicion

68. Suspicion Your concerns should be based on foundation. For example:
Not that the client ‘looked untrustworthy’
But the client was evasive when asked routine fact-find questions
Also, you must never assume that Money Laundering is not a potential issue with existing clients

69. Suspicion No one aspect of the relationship is suspicious
Very often it is a combination of factors or features within a relationship that will lead to a suspicion about the relationship as a whole

70. Why would you be suspicious?
The activity or client behaviour is in itself suspicious
The activity is unusual in the context of the products or services being provided
It’s unusual within the context of what you would consider as common sense
Or within the context of commercial rationale (e.g. client is willing to lose money)

71. Reasonable Grounds
Does the suspicion have a rational foundation that you can ‘put your finger on’
Would another honest person, with the same level of knowledge, be suspicious?
If you decide not to report would you feel confident explaining why at a later date

72. Tipping off (s333)
This offence is committed by a person who discloses information which is likely to prejudice an actual or proposed investigation
Tipping off only becomes a real danger after a SAR has been made
IMPORTANT - get guidance from MLRO

73. JMLSG Guidance
Industry body that provides guidance and best practice concerning the regulations
Approved by HM Treasury
Therefore a court can take that guidance into account
Provides a practical interpretation of the Regulations

74. FCA Handbook
One of the FCA’s Statutory Objectives is to ‘reduce the extent to which it is possible for a business carried on by a regulated person to be used for a purpose connected with financial crime’
Simplified the Handbook in 2006 by removing the Money Laundering rules
Replaced by additional System and Controls (SYSC) rules

75. Review Primary legislation Secondary legislation Industry Guidance
POCA 2002
Secondary legislation
ML Regulations 2007
Industry Guidance
JMLSG
Regulatory monitoring - FCA

76. Review Failure to Report (s330) Tipping off (s333)
Understand what constitutes knowledge, suspicion and reasonable grounds

77. Our AML procedures

78. Customer Due Diligence
Money Laundering Regulations 2007 dictate the ID verification processes
‘Know Your Client’ equals……….

79. Customer Due Diligence
Money Laundering Regulations 2007 dictate the ID verification processes
‘Know Your Client’ equals……….fact-find
A fact-find for Anti-money laundering purposes consists of:
Name, Address, DOB, Gender, Nationality, reason for entering into relationship, how any funds were acquired

80. Customer Due Diligence
The CDD/KYC process is not just about client identity.
KYC information is needed to identify money laundering activity
The more that is known about a client the better placed individuals will be to identify unusual and potentially suspicious activity

81. Identity Verification
Verification checks enable us to prove that the individual
Is who he/she says he/she is (name)
Lives where he/she says he/she lives (address)
This is based on the CDD/KYC information
Make a record of the ID seen to verify the client’s identity

82. Identity Verification
The ID process isn’t done to say that the client has valid ID and therefore can’t be a ‘money launderer’ or commit a financial crime offence
It is about validating the fact find (KYC) information they have provided
Maintaining a record of that information should it be needed by law enforcement at a later date

83. Identity Verification
99% of suspicious activity is identified through good quality fact-find information as part of the KYC process
It is not identified through the ID verification process
Individuals with valid ID can still commit money laundering offences:

84. Offences covered by POCA
Traditional money laundering of cash
Tax evasion
Successful fraud including mortgages / insurance
Benefit fraud – child tax credit, working tax credit, DWP benefits
But ultimately:

85. Offences covered by POCA
Money laundering occurs every time any
transaction takes place or any
relationship is formed that involves any
form of property that has come from any crime.

86. Our Processes
Fact-find – a regulatory need for a number of reasons but also to meet ML needs
ID verification – URU or in some cases paper ID
Records are held in IPoS/Officeweb, URU, or on paper files
URU results do not need to be uploaded to OfficeWeb but paper ID & income proof should be

87. URU
URU is an electronic ID system that looks at a clients electronic footprint
Depending on the amount of electronic data will give a pass or will ask for more information
Paper ID reference numbers can be input to verify the documentation and the client
Includes other fraud checks

88. URU
ID verification must be completed for all mortgage and financial planning business
URU must be completed for new clients and for existing clients where fact find information has changed (e.g. name & address)
URU / ID verification must be completed before an application is submitted

89. URU The small premium exemption applies for:
General Insurance, Pure Protection & Whole of Life contracts ONLY;
Where the total premiums for all contracts being arranged are under £600 (£50 a month) or where a single premium of no more than £1800 is paid;
Premiums are paid from one of the lives assureds own bank account or a joint account; AND
There is no knowledge or suspicion that a proposed relationship or transaction involves money laundering, terrorist financing, or there are no doubts about the veracity or accuracy of documents, data or information obtained from the customer.

90. URU In these cases a URU check does not need to be completed
When creating a Contract in OfficeWeb you will select “Simplified Due Diligence” to indicate the recommendation meets the above criteria and that ID checks have not been performed .

91. URU Refer to URU procedures on extranet
Useful Documents section at Financial Crime > Electronic ID

92. Review
The ID process is done to verify the CDD/KYC information provided by the client and does not alone allow you to identify ML suspicions
URU reduces the risk of impersonation fraud and associated financial crimes
It is the default method to verify ID
Should be carried out for all types of policies before application submission

93. MLRO responsibilities

94. Intrinsic MLRO You need to know who the MLRO is
You also need to know what the MLRO does
The MLRO has legal and regulatory responsibility for AML systems and controls
However, if you don’t follow those processes you are responsible

95. Intrinsic MLRO Ask yourself, who is Intrinsic MLRO? Sharon Trinder……….
Is also the Head of Financial Crime for the Intrinsic Group

96. Intrinsic MLRO Approved Person with FCA (CF11)
Develops AML ID processes
Annual Risk Assessments
Adviser and staff training and awareness
Dealing with Suspicious Activity Reports
Liaising with Police, FCA etc
MI reporting to Exec & Board

97. Intrinsic MLRO
If you do have a suspicion you need to know who to report it to and what will happen.
What do you do if you have a suspicion?

98. Intrinsic MLRO Speak to MLRO
Complete a Suspicious Activity Report (SAR) Form
Available on the extranet in the Useful Documents section under Financial Crime -> Money Laundering

99. Intrinsic MLRO

100. Intrinsic MLRO
Save the SAR as a Word or PDF document and it to MLRO with any supporting documents
You will receive acknowledgement with a reference number within 24 hours of receipt
Keep this acknowledgement safe as evidence of receipt

101. Intrinsic MLRO
The acknowledgement may contain advice about how to deal with the case / transaction / client
Do not mark any client file with a record of your suspicion or the fact that you’ve made a SAR
If in any doubt about continuing with your work associated with the SAR refer to MLRO for advice

102. Intrinsic MLRO MLRO will review the SAR and supporting information
May ask for further details or clarification
May ask you to obtain further information to help with the assessment
Guidance will be provided so not to tip anyone off about the SAR

103. Intrinsic MLRO
You will not receive any details after MLRO assessment has been completed
Options:
Do nothing
Report to NCA (formerly SOCA)
Report to lender/provider
Report to Police/Action Fraud

104. Intrinsic MLRO
If the MLRO makes a report to NCA your details are not included
The information is only used for intelligence purposes and does not form part of any criminal prosecution
You will not be called to give evidence
The suspect will not link any prosecution back to you or us

105. Intrinsic MLRO
Information provided is stored on NCA systems and UK law enforcement and other agencies (e.g. HMRC or DWP) can read and search for intelligence
NCA will acknowledge MLROs report and provide a reference number

106. Consent
If a transaction is pending or has not been completed you may need to get consent to continue with it
MLRO can provide that consent
In some cases consent would need to be obtained from NCA
This can take up to 7 days – in some cases longer

107. Review
You need to understand who Intrinsic’s MLRO is and what the responsibilities are
SARs should be made to the MLRO
Where consent is required made need to go to NCA for this
When you’ve made the SAR you have met your obligations under POCA

108. AML, your role and your responsibilities

109. Your responsibilities
It is not necessary for you to memorise the AML legislation although you are expected to understand what your obligations are as a result of it
You need to be aware of who the MLRO is and how to make suspicious reports
You need to understand how to recognise suspicious circumstances

110. Your responsibilities
Failure to Report:
POCA 330
Up to 5 years imprisonment or fine or both
Concealing, entering into & Acquiring
POCA
Up to 14 years imprisonment or fine or both
Tipping off
POCA 333

111. Your responsibilities
By being aware of your obligations, identifying suspicious activity and making a report you meet your requirements under POCA 330
Your acknowledgement is evidence of this

112. Review Be aware of your responsibilities
Serious consequences if obligations not met
Be aware of the role you play in identifying financial crime and do not under-estimate it
Good knowledge and awareness, coupled with sound processes and controls are themselves a deterrent

113. What happens next?
As an Adviser with Intrinsic you are required to demonstrate competence in a number of areas.
Money Laundering and Financial Crime is one of those areas
This CBT, along with the information in the Financial Crime section of the Extranet, will provide you with suitable knowledge

114. Worksmart Test You will have 2 attempts to pass this test
If you fail the first attempt, the second attempt will auto-generate 48 hours after completion of the first test.
This will give you a minimum period of time to review the areas previously failed and re-study before trying the test again

115. Worksmart Test
If you are an adviser or AR with ‘relevant’ staff that also need to be aware of Anti-Money Laundering requirements you can provide them with this CBT
Then request that the Financial Crime Team in Swindon sets up a test in Worksmart for them

116. Need more information?
If you need clarification on any parts of this CBT contact the Financial Crime Team in Swindon
You can also refer to the relevant extranet site (under Financial Crime) for further guidance, previous Financial Crime bulletins and URU procedures

117. You have now completed the Anti-Money Laundering CBT
Click on one of the buttons below