Anti Money Laundering Policy Money Laundering Regulations 2003 Proceeds of Crime Act 2002 ______________________________________________________________ 1. 1.1 Policy Statement Gedling Borough Council will adopt the procedures stated below to ensure compliance with the Money Laundering Regulations 2003 and Proceeds of Crime Act 2002. Background Money Laundering is the term used for a number of offences involving the integrating of the proceeds of crime into the mainstream economy. The Money-Laundering Regulations 2003 attempt to provide a preventative solution to this problem. The following requirements are reinforced by the money laundering sections of the Proceeds of Crime Act 2002 and the Terrorism Act 2000. Requirements of the Money Laundering Regulations 2003 The 2003 Regulations require that ‘relevant businesses’ adopt a number of key measures to counter money laundering. There are different obligations under the legislation dependent on the nature of the business or individuals’ role within the organisation. The Regulations include the following summary of relevant businesses: • • • • • • • Investment business Accountancy and audit Money service operators Estate agency work Operating a casino Insolvency practitioners Tax service 2. 2.1 2.2 3. 3.1 3.2 • • Providing legal services, including financial or real property transactions Company and Trust formation, operation or management dealing in goods that involve accepting payments in cash of 15,000 Euros (£10,000 approx.) or more. More relevant to local authorities, however, are the requirements of the Proceeds of Crime Act 2002. These require the reporting of suspicions of any potentially ill-gotten gains or attempted recycling thereof to be reported to the National Criminal Intelligence Service (NCIS). 3.3 Measures required include: • • • • 4. 4.1 Training of staff to recognise transactions that may indicate money laundering The appointment of a Money-Laundering Reporting Officer who will receive staff disclosures on suspicions of money laundering Verifying the identity of new clients and keeping records of evidence obtained Reporting any suspicious transactions to the National Criminal Intelligence Service (NCIS). Application of the Regulations to Council Activities Whilst local authorities are not separately identified in the list of relevant businesses shown in 3.2, there are some local authority activities that could come within the scope of the Money Laundering Regulations, for example: • • • • Investments – this would cover activities such as the issue of local bonds or transfers to or from non-UK banks Sale of land/buildings (as sale proceeds could be in cash) Receipt of Cash Payments may relate to the sale of goods (e.g. land or equipment) as opposed to services (e.g. NNDR or property rents) However, all services and any suspicious amounts are implicated under the Proceeds of Crime Act 2002. 4.2 The money laundering requirements, from this Council’s point of view, are: • Provision of training to relevant officers on the requirements of the legislation, including the identification of suspicious transactions, identity verification and reporting procedures. This will include training for Cashiers and Revenues staff, Treasury Management, Legal, Audit, Property and Benefit Services staff, although every officer in the Council is technically implicated. Establishment of procedures for the above officers to report any suspicions to the Money Laundering Reporting Officer (‘MLRO’) e.g. all suspicious cash payments of £1,000 or more. • • Designation of an officer as the Money Laundering Reporting Officer, who will receive any reports, keep records and if considered appropriate, make reports to the National Criminal Intelligence Service (NCIS). 5. Procedures Each relevant officer should in the course of Council business implement: 5.1 Identification procedures Regulations, 4 & 5): These regulations apply if: (SI 2003/3075 Money Laundering a) The Council is forming a business relationship; or b) The Council is considering undertaking a one-off transaction, and i). Suspects a transaction involves money laundering; or ii). A payment is to be made for €15,000 or more (approximately £10,000); c) In respect of two or more one-off transactions that the transactions are linked and involve €15,000 or more. In these instances the Council will: a) Set up and maintain identification procedures to ensure the client produces satisfactory evidence of identity; b) Follow the procedures to ensure the client provides satisfactory evidence. These procedures should reflect: a) The greater potential for money laundering if the client is not physically present when being identified; b) If satisfactory evidence is not obtained the relationship or transaction does not proceed; c) If the client acts, or appears to act, for another person, reasonable measures must be taken for the purpose of identifying that person. The primary exception to this requirement is if the client carries on FSA regulated business in the UK (or comparable by overseas regulatory authority) it is not required that the officer obtain evidence. Most treasury transactions will be undertaken with or via regulated businesses. If any treasury investment clients are not known to the Council the treasury officer will ensure their identification by checking their creditrating. However, even when dealing via a broker it is still the Council’s ultimate responsibility to verify the counterparty, not the broker’s. This would normally be undertaken during the compilation of the counterparty list. If the client is neither credit-rated nor known to be carrying on regulated business (e.g. FSA), the Council will not deal with that firm. The Council already restricts its Treasury Management activity to certain financial institutions in order to meet its own Treasury Management and Investment Strategies, which are approved by the Council annually. 5.2 Record-keeping procedures (Money Laundering Regulation 6):– The Council will maintain procedures covering the retention of records. To ensure compliance, records are required to be kept for 5 years after the end of the transaction or relationship. 5.3 Internal reporting procedures (Money Laundering Regulation 7) – The Council will maintain internal reporting procedures which document:a) The “nominated officer” who will be the Money-Laundering Reporting Officer (MLRO) who will receive nominations under this regulation; that officer is the Council’s Chief Financial Officer; b) Any other person in the organisation to whom information may arise which may result in them knowing or suspecting reasonable grounds for knowing or suspecting money laundering, fraud or use of the proceeds of crime; c) If the MLRO receives a disclosure they should consider, in the light of all information, whether it gives rise to such knowledge or suspicion; and d) If the MLRO determines that the information or matter should be disclosed they should do so to the National Criminal Intelligence Service. 5.4 Other procedures (Money Laundering Regulation 3(b)) – The Council will establish other procedures of internal control and communication as may be appropriate for the purpose of forestalling and preventing money laundering: Refunds – Care will need to be taken especially with the procedures for refunds. For instance, a significant overpayment which results in a repayment will need to be properly investigated and authorised before payment. In the event of any suspicious transactions, the Council’s Head of Finance (i.e. the MLRO) will be contacted and the Manager of Resource Services will investigate the case. The possible perpetrator should not be informed. 5.5 Training (Money Laundering Regulation 3(c)): The Council will take appropriate measures to ensure that relevant employees are: a) Made aware of the provisions of these regulations, Part 7 of the Proceeds of Crime Act 2002, Section 117 of the Anti-Terrorism, Crime and Security Act 2001 and Sections 18 and 21A or the Terrorism Act 2000 (these deal with the offences and are available from www.legislation.hmso.gov.uk); b) Given training in how to recognise and deal with transactions that may be related to money laundering; c) The training will be given in-house over the course of the next three months. National Criminal Intelligence Service - In the event of an offence or a possible offence the MLRO will contact: NCIS Law enforcement personnel.