The law states that you should "regularly" train all employees relating to the law and risks in regards to money laundering and terrorist financing ( Regulation 21 of the Money Laundering Regulations 2007). Compliance with Anti-Money Laundering Regulations is still one of the greatest challenges for solicitors in the UK today. Whilst you may think it is excessive regulation or red tape, identifying and verifying a client’s identity is an essential requirement under current Anti-Money Laundering (AML) legislation and, as a regulated firm, legal professionals must employ a risk-based approach to their due diligence processes.
Not complying with AML puts you at risk of committing criminal offences. See below for a summary of the offences and the relevant penalties. In addition to the principal offences, you could also be charged with offences of conspiracy, attempt, counselling, aiding, abetting or procuring a principal offence, depending on the circumstances.
Section Description Penalty
327 Conceals, disguises, converts, transfers On summary conviction
or removes criminal property up to six months 328 Arrangements regarding criminal property imprisonment or a fine or both
329 Acquires, uses or has possession of On indictment — up to 14 criminal property years imprisonment or a fine or both
330 Failure to disclose knowledge, suspicion or On summary conviction — reasonable grounds for suspicion of money up to six months laundering — regulated sector imprisonment or a fine or both 331 Failure to disclose knowledge, suspicion or reasonable grounds for suspicion of money laundering — nominated officer in the regulated sector
332 Failure to disclose knowledge or suspicion of On indictment — up to five of money laundering — nominated officer years imprisonment or a in non-regulated sector fine or both
333 Tipping off — before 26 December 2007 On summary conviction — up to six months imprisonment or a fine or both
333A Tipping off — regulated sector On summary conviction – up to three months imprisonment or a fine not exceeding level 5 or both.
On conviction on indictment- up to two years imprisonment or a fine or both.
342 Prejudicing an investigation On indictment — up to five years imprisonment or a fine or both
Many traditional identity checking methods can be costly, inefficient, insubstantial and time-consuming and they can also cause additional headaches from the enhanced due diligence requirements for increased risk or absent clients. Checking someone’s passport or driving licence does not rule out the threat that these could be very clever forgeries. It will also not indicate whether your client is a Politically Exposed Person (PEP), or if they appear on Sanctions lists. In order to remove some of these practical difficulties, enhance existing customer due diligence or corroborate manual checks, electronic verification can help to verify the identity of individuals, organisations or other forms of non-beneficial owners online. Many lenders still require photographic identification but leading electronic verification services such as AML Search can incorporate this information into the electronic check, with the system automatically adjusting the level of risk according to the type of document uploaded. In the current economic climate, electronic verification is a simple and effective solution that can reduce the burden, time and costs of compliance, enhancing your client’s experience and protecting you and your firm from risk. For more information about AML Search from STL Group see here
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