Cumbria County Council Anti-Money Laundering Policy March 2008 ______________________________________________________________________ Introduction 1 There have been significant changes to the legislation concerning money laundering (the Proceeds of Crime Act 2002 and the Money Laundering Regulations 2003), which have broadened the definition of money laundering and increased the range of activities caught by the statutory framework. As a result, the new obligations now impact on areas of local authority business and require local authorities to establish internal procedures to prevent the use of their services for money laundering. Scope of the Policy 2 This policy applies to all Members and staff of the Authority and aims to maintain the high standards of conduct which currently exist within the Authority. The policy sets out the procedures which must be followed to enable the Authority to comply with its legal obligations. Within this policy the term employees refers to all employees and elected members. 3 Directors must ensure that all employees are aware of this policy. What is Money Laundering? 4 In general terms money laundering is the disposal of money from criminal activity on legitimate activities, for example, cash obtained from a criminal activity, such as selling stolen goods, being spent on the purchase of a vehicle being disposed of by the Authority. 5 Any employee would be caught by the money laundering provisions if either they are actively involved in money laundering or suspect money laundering and do nothing about it. 6 Whilst the risk to the Authority of contravening the legislation is low, it is extremely important that all employees are familiar with their legal responsibilities: serious criminal sanctions may be imposed for breaches of the legislation. The Money Laundering Reporting Officer (MLRO) 7 The officer nominated to receive disclosures about money laundering activity within the Authority is the Council‟s Monitoring Officer, contact number: 01228 607350. 8 If an employee is concerned about possible money laundering or the impact of these legal requirements on their duties, when considering whether a disclosure needs to be made they must seek advice from the MLRO, the Head of Management Audit or their line manager. The Disclosure Procedure 9 Where an employee knows or suspects money laundering activity is taking/has taken place, or they become concerned that their involvement in a matter may amount to a prohibited act under the legislation, before taking any money they must telephone the MLRO for guidance as soon as possible regardless of the amount being offered. ________________________________________________________________________ 10 If an employee has no reason to suspect or know that money laundering activity is taking/has taken place and if the money offered is less than £2000 in cash as payment or part payment for goods/services offered by the Authority then there is no need to seek guidance from the MLRO. 11 However, if the money offered is £2000 or more in cash then payment must not be accepted until guidance has been received from the MLRO even if this means the person has to be asked to wait. The employee can give the reason for this delay to the person concerned, as they and the Authority have a responsibility to ensure there is no breach of law. 12 Before telephoning the MLRO privately for guidance, where-ever possible employees should take the name and address of the person offering the cash payment. If the money is subsequently taken a receipt must be issued bearing the name and address of the person paying. 13 Once the employee has reported their concern to the MLRO they must follow the directions provided. They must not make any further enquiries into the matter themselves: any necessary investigation will be initiated by the MLRO. The MLRO will in turn refer the matter on to the National Criminal Investigation Service (NCIS) if appropriate. All members of staff will be required to co-operate with the MLRO and the relevant authorities during any subsequent money laundering investigation. 14 Once the MLRO has evaluated the employee‟s report and any other relevant information, they must make a timely determination as to whether: there is actual or suspected money laundering taking place; or there are reasonable grounds to know or suspect that this is the case; and whether the MLRO needs to seek consent from the NCIS for a particular transaction to proceed. 15 Where the MLRO does so conclude, then they must disclose the matter as soon as practicable to the NCIS on their standard report form and in the prescribed manner, unless the MLRO has a reasonable excuse for non-disclosure to the NCIS. 16 Where the MLRO suspects money laundering but has reasonable cause for non- disclosure, then they must record this (the MLRO must liaise with the legal adviser to decide whether there is a reasonable excuse for not reporting the matter to the NCIS). The MLRO can then immediately give their consent for any ongoing or imminent transactions to proceed. Where the MLRO concludes that there are no reasonable grounds to suspect money laundering then they must record this and give their consent for any ongoing or imminent transaction(s) to proceed. 17 Where consent is required from the NCIS for a transaction to proceed, then the transaction(s) in question must not be undertaken or completed until the NCIS has specifically given consent, or there is deemed consent through the expiration of the relevant time limits without objection from the NCIS. 18 All records of the whole process and reports made to the NCIS must be retained by the MLRO in a confidential file kept for that purpose, for a minimum of five years. ________________________________________________________________________ 19 The MLRO commits a criminal offence if they know or suspect, or has reasonable grounds to do so, through a disclosure being made to them, that another person is engaged in money laundering and they do not disclose this as soon as practicable to the NCIS. Client Identification Procedure 20 When telephoning the MLRO the employee should have the relevant details which should include: the name and address of the person offering the payment the amount of cash being offered any reasons offered about the holding or possession of such amounts of cash the reasons for the employee‟s knowledge or suspicion of money laundering activity. 21 Additionally the employee should ask if the person offering payment has some appropriate form of identification that would satisfactorily prove identity and address. In some cases the reasons for having the large amount of cash together with the process of identification will be acceptable, but this is to be decided by the MLRO. Record Keeping Procedures 22 Appropriate records of the whole process must be taken including: the name of the person offering the cash the amount of cash offered the telephone conversation with the MLRO (or other officer) copies of the identification documentation provided (or full written details including all document serial numbers) 23 Copies of these records must be sent to the MLRO, marked „in confidence‟. The MLRO is responsible for keeping such records and reviewing them for any discernible trends or problems. 24 At no time and under no circumstances should anyone voice any suspicions to the person(s) suspected of money laundering as this may constitute a criminal offence of “tipping off”. Do not, therefore, make any reference on a client file to a report having been made to the MLRO. Should the client exercise their right to see the file, then such a note will obviously tip them off to the report having been made and may render you liable to prosecution. The MLRO will keep the appropriate records in a confidential manner. Examples 25 Any transaction involving an unusually large amount of cash should cause questions to be asked about the source. This will particularly be the case where cash paid exceeds the amount necessary to settle a transaction, and the person(s) concerned request a non-cash return of the excess. This will include double payments. The reason for the use of trusts or offshore funds for handling the proceeds or settlement of a transaction should be questioned. ______________________________________________________________________ Care should be exercised and further enquiries may be needed where: a third party intermediary becomes involved in a transaction the identity of a party is difficult to establish or is undisclosed a vehicle company is used by a third party and the ultimate ownership is concealed or difficult to establish a party is evasive as to the source or destiny of funds.