Index
ABC sales 16
aborted transactions 15 , 141
access points 12 , 199
‘all crimes’ approach 22 , 25 , 29 , 59 , 72 –87 , 93 –94 , 162 , 173 –174 , 183 , 186 , 194 , 232 , 234 –235 , 244 ; see also Proceeds of Crime Act (POCA) 2002
anti-money laundering (AML) 1 –19 ; AML regime within legal sector, enforcement 214 –218 , 232 , 243 ; clean corporate culture, creating 211 –212 , 232 , 243 ; client risk profile, identifying and understanding 210 , 212 , 221 –222 , 227 , 232 , 243 , 244 ; collateral benefits of CDD 210 –212 , 232 , 243 ; compliance costs, participants’ views on 208 , 212 , 242 ; compliance to lawyers and firms, benefits of 208 –212 , 231 –232 , 243 ; costs and benefits 206 –213 , 231 –232 , 242 –243 ; easily quantifiable costs 207 ; reputational risk, managing 208 –210 ; SRA AML supervision 55 –58 , 143 , 213 –214 , 216 –217 ; see also training, AML; UK AML regime
‘appropriate consent’ 24 –25 , 27 –28 , 38 –39 , 74 , 155 , 186
‘arrangement’ offence, s 328 POCA 2002 23 –26 , 38 , 144 –145 , 150 , 153 , 155
beneficial ownership 44 –46 , 98 –111 , 151 , 236 –237 ; CDD requirements 44 –46 ; challenges in non-EU jurisdictions 101 , 110 , 151 , 236 ; challenges to 100 –105 , 110 , 151 , 236 ; changes in 106 –107 , 110 , 151 , 236 ; company formation 107 –109 ; control 104 –105 , 110 , 151 , 236 ; lack of transparency in/use of nominees 109 –111 , 151 , 236 ; private equity funds 102 –103 , 110 , 151 , 236 ; prohibitive costs 103 –104 ; requirements, vulnerabilities in UK 106 –111 , 151 , 236 ; trusts 102 , 110 , 151 , 236 , 25 % threshold 104 –105 , 110 , 151 , 236
benefit concept 22 , 73 –74 , 78 , 84 –85 , 183 , 185 , 189 , 241
bespoke SARs form for legal profession 182 –185 , 194 , 240
bespoke training 139 –140 , 152 , 238
breach of contract, civil action for 38 –40 , 133 , 164
charities, legal services for 18
clean assets 10 , 15 , 26 , 145
clean corporate culture, creating 211 –212 , 232 , 243
client account 14 –15 , 55 –57 , 140 –151 , 153 , 239 ; absence of, money laundering risk and 144 –146 , 150 , 153 , 239 ; as a banking facility 142 –144 , 150 , 152 , 239 ; lack of 146 ; misuse of 14 –15 ; money laundering and 55 –57 , 140 –151 ; pooled client accounts 147 –153 , 239 ; solicitors no longer holding 144 –147 , 150 , 153 ; SRA Accounts Rules 2011 55 –57
client affairs, managing 18
client relationship, and tipping off 191 –192 , 196 , 241
client risk profile 210 , 212 , 221 –222 , 227 , 232 , 243 , 244 ; identifying 210 , 212 , 231 , 243 ; understanding 210 , 212 , 243
Code of Conduct, SRA 4 , 54 –55 , 146
collateral benefits of CDD 210 –212 , 232 , 243
companies, setting up and/or management of 16 –17 , 107 –109
compliance costs, participants’ views on 208 , 212 , 242
compliance officer for finance and administration (COFA) 52 –53
compliance officer for legal practice (COLP) 52 –53
‘compliance participants’ 62 , 64 , 72
complicit launderers 107 , 110 , 151 , 236
consent regime 24 –27 , 38 –40 , 74 , 76 , 86 –87 , 90 , 93 –94 , 131 , 155 –157 , 161 –162 , 185 –192 , 195 –197 , 241 ; client relationship and tipping off 191 –192 , 196 , 241 ; deal pressure and 190 –191 , 196 , 241 ; NCA DAML/consent team 187 –190 , 196 , 241
counter-terrorism finance (CTF) 7 , 85
Criminal Finances Act 2017 4 , 25 , 29 , 37 , 75 , 179 , 190
criminal money management 10
criminal property 73 –74 , 77 , 85 , 88 , 91 , 122 , 131 , 155 , 185 , 196 , 223 , 227 , 241
customer due diligence (CDD) 3 , 41 , 43 –46 , 96 –98 ; beneficial ownership information 46 ; collateral benefits of 210 ; expanded CDD provisions 97 ; international presence and 97 ; requirements 44 –45 ; verification 46
data analysis 69
data collection 66 –68 ; interview, conducting 67 –68 ; interview preparation 66 –67
data management 68 –69 ; anonymity and confidentiality 68 –69 ; transcription 68
Data Protection Act 1998 40
de minimis principle 84 –85 , 196
deal pressure and consent regime 190 –191 , 196 , 241
deal risk 223 , 227 , 243
defence against money laundering (DAML) SARs 26 , 86 , 155 –156 , 158 , 164 , 186 , 190 , 195 –196
defensive reporting within the SARs regime 78 , 172 –173 , 194 , 234 , 240
dirty assets 10
easily quantifiable costs 207
Economic Crime Plan 2019–22 2 , 6 , 40 , 181 –182 , 194 , 197 , 207 , 217 , 231 , 234 , 241 , 245
embedding 10
enforcement 58 , 214 –218 , 232 , 243
England, and Wales 18 –19
enhanced customer due diligence (EDD) 47 –48 , 115 –116 , 118 –120 , 122 –123 , 152 , 221 , 227 , 237
equivalence, administrative burden of 112 –114 , 151 , 237
ethics and reflexivity 64 –66
exemptions 24 –27 , 30 –31 , 37 ; under ss 327–9 POCA 2002 24 –27 ; under ss 330/1 POCA 2002 30 –31 ; under s 342 POCA 2002 37
‘failure to disclose’ offences 27 –31 , 155 –156 , 162 , 193 , 239 ; ‘all crimes’ approach in 29 ; exemptions under ss 330/331 POCA 2002 30 –31 ; objective standard in 28 –29 , 156 ; regulated sector, ss 330/331 POCA 2002 27 –31 ; section 330 POCA 2002 offence, ‘required’ disclosures 28 –29 ; section 331 POCA 2002, failure to disclose, nominated officers in the regulated sector 30 –31
familiarisation stage 69
fictitious claims 17 , 64
Fifth EU Money Laundering Directive (5MLD) 3 , 20 , 111 , 236 ; EU under the aegis of 151 ; transposition 20 , 42 , 110 , 236
Financial Action Task Force (FATF) 2 –3 , 6 , 10 , 12 –14
financial conduct 10
firm level money laundering risks 219 –229 , 232 , 243 –244 ; breadth of POCA 2002 223 –224 , 228 , 244 ; classification 225 –228 , 244 ; deal risk 223 , 227 , 243 ; jurisdictional risks 219 –221 , 227 , 243 ; new clients 221 –222 , 227 , 244 ; PEPs 221 –222 , 227 , 244 ; wealth risk, source of 222 –223 , 227 , 243 ; wealthy individuals 221 –222 , 228 , 244
‘Fit and Proper Test’ 53
Fourth EU Money Laundering Directive (4MLD) 3 , 21 –22 , 27 , 77 , 80 , 85 , 90 , 111 , 135 , 151 , 218 ; domestic PEPs and 115 , 120 ; EU under the aegis of 151 ; in regulated sector businesses 27 ; transposition of 8 , 20 –21 , 41 , 62 , 72 , 75 –76 , 81 , 93 –94 , 114 , 141 , 147 –148 , 155 , 187 , 195 , 207 , 219 , 235 –236 ; UK’s existing obligations under 85 , 88
gatekeepers 3 , 5 , 12 , 198 , 200 , 205 , 207
good corporate citizenship 211
Government’s Action Plan 2016 51 , 80 –81 , 84 , 156 , 161 , 178 –179 , 183 , 186 , 206 , 245
‘hard’ costs 207 , 212 , 242
historical criminality 129 –132 , 152 , 237
‘informed’ consent 64
‘insider’ former practitioner 65
insider/outsider dichotomy 66
‘insider’ status of a researcher 65
integration 10 –11
intent element 88 –90 , 94 , 235
interview: conducting 67 –68 ; preparation 66 –67
Joint Money Laundering Intelligence Taskforce (JMLIT) 180 –181
judgment call: source of funds 125 –126 , 132 , 152 , 237 ; source of wealth 127 –128 , 132 , 152 , 237
jurisdictional risks 219 –221 , 227 , 243
justification 10
Lander, review of SARs regime 172
lawyers’ client accounts misuse 14 –15 , 56 –57
lawyers as unpaid investigators 201 , 206 , 231 , 242
legal profession: aborted transactions 15 , 141 ; bespoke SARs form for 182 –185 , 194 , 240 ; charities, legal services for 18 ; client affairs, managing 18 ; companies and trusts, setting up and/or management of 16 –17 , 107 –109 ; launderers seeking legal assistance 15 ; lawyers’ client accounts misuse 14 –15 ; money laundering methods and 13 –19 ; POCA 2002 burden on 76 –84 , 93 , 234 ; property purchases 15 –16 ; sham litigation/fictitious claims 17 ; specialised legal skills 18 ; SRA AML supervision of 57 –58 , 213 –214 , 216 –218 , 232 , 243 ; transferring funds through the client account 15 , 55 –57 ; vulnerabilities affecting 13 –19
legal profession, AML role within 198 –206 , 231 , 242 ; as appropriate 200 –201 , 205 –206 , 231 , 242 ; lawyers as unpaid investigators 201 , 206 , 231 , 242 ; maturity of 202 –203 , 206 , 231 , 242 ; money laundering via, poor evidence of 203 –204 , 206 , 231 , 242 ; pragmatic view 205 , 206 , 231
legal professional privilege (LPP) 11 , 26 , 30 , 33 –35 , 174 –175
Legal Sector Affinity Group 4 , 11 , 18 , 21 , 165 , 228
Legal Sector Affinity Group AML Guidance (LSAG Guidance 2018) 4 , 11 , 23 , 42 , 46 , 48 –50 , 52 , 130 , 132
legal sector SARs number 157 –162 ; decline in 157 –160 ; poor quality 160 –162 , 189
mandatory disclosures
see required disclosures
methodology 60 –71 ; ‘complete coding’ 69 ; data analysis 69 ; ethics and reflexivity 64 –66 ; failure to disclose offence 64 ; purposive sampling 62 –64 ; qualitative interviews 61 –62 ; research aims 60 –61 ; research and quality criteria, limitations 70 ; research method 61 –62 ; researcher reflexivity 65 –66 ; seniority and practice area 64 ; substantive money laundering offence 64 ; top 50 UK law firms 63 –64 ; see also data collection; data management
minor offences 76 –77
money laundering: background to 10 –12 ; components 10 ; embedding 10 ; integration 10 ; justification 10 ; layering 10 ; placement 10 ; risk, assessment 218 –229 , 232 , 243 –244 ; see also firm level money laundering risks
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) 4 , 8 , 41 –52 ; AML policies and procedures 50 ; AML training 51 –52 ; customer due diligence (CDD) 41 , 43 –46 ; criminal sanctions and 90 –94 , 235 ; criminal sanctions removal from 90 –91 , 94 , 235 ; criminal sanctions retention in 91 –92 , 94 , 235 ; enhanced customer due diligence (EDD) 47 –48 ; ongoing monitoring 49 ; policies, controls, and procedures 50 –52 ; reliance 49 ; risk assessments 42 –43 ; risk-based approach to AML 41 –42 ; simplified customer due diligence (SDD) 48 –49
Money Laundering Compliance Officer (MLCO) 50 –51
money laundering offences, intent inclusion in 88 –90 , 94 , 235 ; consequences of 89 –90 , 94 , 235 ; intent element 88 –90 , 94 , 235
Money Laundering Regulations 2007 (MLR 2007) 4 , 8 , 21 , 41 , 48 , 67 , 83 , 97 –98 , 104 , 108 , 111 , 115 , 117 –120 , 123 –124 , 128 , 130 –133 , 136 –137 , 141 , 151 –152 , 221 , 227 , 235 , 237 –238 ; criminal sanctions and 90 –94 , 235 ; criminal sanctions removal from 90 –91 , 94 , 235 ; criminal sanctions retention in 91 –92 , 94 , 235
money laundering reporting officers (MLROs) 7 , 24 –25 , 28 , 30 –31 , 50 –51 , 62 , 155 , 159 ; crucial role of 169 –171 , 193 –194 , 240 ; wholesale transference of money laundering concerns to 169 –171 , 193 –194 , 240
National Crime Agency (NCA) 1 , 24 –26 , 28 , 31 , 73 –74 , 79 –80 , 154 –157 , 175 –179
National Crime Agency (NCA) DAML/consent team 187 –190 , 196 , 241
National Economic Crime Centre (NECC) 179
National Risk Assessment (NRA) 6 , 18 –19 , 42 , 108 , 122 , 133 , 149 , 158 , 219 , 233 , 242
Nominee shareholding 109 , 111 , 151 , 236
Office for Professional Body Anti-Money Laundering Supervision (OPBAS) 5 , 57 , 181 , 217 , 243
ongoing monitoring 49 , 136 –137 , 238
‘overseas conduct’ defence 26 , 30 –31
People with Significant Control Register (PSC Register) 45 , 99 , 105 –107 , 109 –111 , 205 , 236
policies, controls and procedures (PCPs) of MLR 2017 50 –52
politically exposed persons (PEPs) 47 , 115 –122 , 152 , 237 –238 ; definition of 117 –118 ; domestic PEPs 120 ; enhanced customer due diligence and 118 –120 ; identifying 117 –118
pooled client accounts 147 –151 , 153 , 238 –239
prejudicing investigation, offences of section 342 POCA 2002 37 –38
private equity funds, beneficial ownership challenges to 101 –103 , 110 , 151 , 236
privileged circumstances 30 , 174 –175
Proceeds of Crime Act (POCA) 2002 4 , 20 –31 , 35 –38 , 72 –90 , 93 –95 , 162 , 193 , 234 –235 , 239 ; ‘all crimes’ approach 72 –87 , 93 , 234 ; background 72 –76 ; burden on the legal profession 76 –84 , 93 , 234 ; criminal property under 22 ; detracts from the aim of legislation 80 –81 , 93 ; detrimental effect of 80 , 93 , 234 ; excluding minor offences and regulatory breaches from 76 –87 , 93 , 162 –163 , 193 , 234 , 239 ; exclusions from, achieving 84 –87 , 93 ; minor offences 76 –77 ; non-compliance with, an AML firm-level risk 83 –84 , 223 –224 , 228 , 244 ; offences of prejudicing investigation, section 342 POCA 2002 37 –38 ; overview 21 –22 ; POCA 2002 ‘remainers’ 83 ; ‘real’ versus ‘technical’ laundering 82 –83 , 93 , 234 ; regulated sector, ss 330/331 POCA 2002 27 –31 ; Sections 327–9 POCA 2002, exemptions under 24 –27 ; Sections 327–9 POCA 2002 offences 23 –24 ; serious crimes 76 –77 , 86 –87 ; substantive money laundering offences, ss 327-9 22 –27 ; technical SARs, administrative burden of 78 , 93 , 234 ; tipping off in the regulated sector, s 333A POCA 2002 35 –37 , 191 –192 , 196 , 241 ; see also ‘failure to disclose’ offences; money laundering offences, intent inclusion in
property concept 73
property purchases 15 –16
purposive sampling 62 –64
qualitative interviews 61 –62
quality criteria, limitations 70
‘real’ laundering 77 , 82 , 93 , 234
‘red flag’ indicators 14 , 165
reflexivity 64 –66
reliance 49 , 133 –136 , 152 , 238 ; on law firms by third parties 134 –135 ; on third parties 133 –134
reputational risk, managing 208 –210
required disclosures 28 –31 , 155
research and quality criteria, limitations 70
researcher reflexivity 65 –66
responsibilisation strategy 4 , 201
risk-based approach to AML 14 , 41 , 43 , 48 , 52 , 80 , 90 –91 , 114 , 119 , 121 –122 , 149 , 152 , 179 , 205 , 218 , 234
semi-structured qualitative interviews 61
Serious and Organised Crime Strategy 2018 2
serious crimes approach 76 –77 , 86 –87
sham litigation/fictitious claims 17 , 64
simplified due diligence (SDD) 48 –49 , 111 –114 , 151 –152 , 237 ; equivalence, administrative burden of 112 –113 , 151 , 237 ; holistic approach to 113 ; pooled client accounts and 147 –151 , 153 , 239
smell/sniff test 165
‘soft’ costs 207 , 212 , 242
Solicitors Regulation Authority (SRA) 52 –58 ; AML supervision by 57 –58 ; participants` perceptions of as an AML supervisor 213 –214 , 216 , 218 , 232 , 243 ; SRA Accounts Rules 2011 55 –57 ; SRA authorisation and practising requirements 52 –54 ; SRA Handbook 2011 52 –57 ; SRA Principles 2011 and the SRA Code of Conduct 2011 54 –55 ; SRA Suitability Test 53
source of funds 48 , 122 –126 , 128 –133 , 152 , 222 –223 , 237 –238 ; establishing, challenges in 123 –125 , 132 , 152 , 237 ; guidance on 125 , 132 , 152 , 237 ; historical criminality and 129 –132 , 152 , 237 ; issues surrounding 128 –132 , 152 , 237 ; judgment call on 125 –126 , 132 , 152 , 237 ; shifting parameters of 128 –129 , 132 , 152 , 237 ; third party funds and 131 –132 , 152 , 238
source of wealth 48 , 126 –133 , 152 , 237 –238 ; challenges in 126 –127 , 152 , 237 ; historical criminality and 129 –131 , 152 , 237 ; issues surrounding 128 –132 , 152 , 237 ; judgment call on 127 –128 , 152 , 237 ; shifting parameters of 128 –129 , 152 , 237
Special Purpose Vehicle (SPV) 143
specialised legal skills 18
substantive money laundering offences 22 –27
Suitability Test 53
Supranational Risk Assessment 18 , 34
suspicion 31 –33 , 163 –169 , 193 , 239 –240 ; experience and, interplay between 167 –168 , 193 , 239 ; fact pattern of each transaction 165 –168 , 193 , 239 ; as instinct 165 , 168 , 193 , 239 ; meaning of 163 –169 , 193 , 239 –240 ; meaning, implications of 168 –169 , 193 , 239 –240 ; MLRO, crucial role of 169 –171 , 193 –194 , 240 ; role of 31 –33
suspicious activity reporting (SARs) 9 , 24 , 28 –31 , 74 , 76 –87 , 93 , 154 –197 , 234 –235 , 239 –241 ; background 154 –162 ; bespoke SARs form for legal profession 182 –185 , 194 , 240 ; defensive reporting within 78 , 172 –173 , 194 , 234 , 240 ; intelligence value, lack of 81 , 93 , 173 –174 , 194 , 234 , 240 ; lack of feedback and analysis of 82 , 175 –182 , 194 , 241 ; Law Commission Report on the SARs regime 86 –87 , 156 –157 , 163 –164 , 172 , 174 , 180 , 185 , 193 –196 , 235 , 240 –241 , 245 ; legal professional privilege (LPP) 11 , 26 , 30 , 33 –35 , 174 –175 ; legal sector SARs number, decline in 157 –160 ; NCA and 79 –80 , 187 –190 ; participants’ experience of 162 –197 , 239 –241 ; privileged circumstances 30 , 174 –175 ; technical, administrative burden of 78 , 93 , 234 ; ‘technical’, questionable intelligence value of 81 –82 , 93 , 234 ; see also consent regime
‘technical’ breaches 77
‘technical’ SARs 76 –87 , 93 , 162 , 164 , 172 –173 , 188 –189 , 194 , 234 –235 , 239 –240
‘thick descriptions’ 61
Third EU Money Laundering Directive (3MLD) 77 , 80 , 85
third parties, reliance on 133 –135 , 152 , 238
third party funds 131 –132 , 152 , 238
‘tick-box’ approach 114 , 138
tipping off in the regulated sector, s 333A POCA 2002 35 –37 , 191 –192 , 196 , 241 ; exemptions from 36 –37 ; offences under 35 –36
training, AML 51 –52 , 137 –140 , 152 , 238 ; bespoke training 139 –140 , 152 , 238 ; delivery of 137 ; importance of 138 –139 , 152 , 238 ; improvements to 139 –140 , 152 , 238
transactional interruption 25 , 38 –40 , 78 –79 , 93 , 167 –186 , 191 , 196 , 234
‘transactional participants’ 62 , 64 , 72
trust or company service providers (TCSPs) 107 –108
trusts, beneficial ownership challenges to 101 –103 , 110 , 151 , 236
trusts, setting up and management of 16 –17
typologies, money laundering 8 , 13 –19
UK AML legislative framework 20 –51 , 72 –95 ; see also Proceeds of Crime Act (POCA) 2002
UK AML regime 20 –59 ; AML training 51 –52 , 137 –140 , 152 , 238 ; background 20 –21 ; civil action for breach of contract 38 –40 , 133 , 164 ; client account 14 –15 , 55 –57 , 140 –151 , 153 , 238 –239 ; enforcement 58 , 214 –218 , 232 , 243 ; mechanical aspects of 93 –153 , 235 –239 ; SARs regime 24 –26 , 28 –31 , 76 –87 , 93 , 154 –197 , 234 –235 , 239 –241 ; suspicion role in 31 –33 ; see also beneficial ownership; client account; customer due diligence (CDD); enhanced customer due diligence (EDD); ‘failure to disclose’ offences; Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017); politically exposed persons (PEPs); Proceeds of Crime Act (POCA) 2002; reliance; simplified due diligence (SDD); Solicitors Regulation Authority (SRA); source of funds; source of wealth
UK AML regime, participants’ perceptions of 198 –232 , 241 –244 ; legal profession role within 198 –206 , 242 ; SRA supervision, and enforcement 213 –218 , 243 ; see also legal profession, AML role within
UK Financial Intelligence Unit (UKFIU) 24 , 154 –155 , 175 –179 , 187 –190 , 196 –197 , 241 ; see also National Crime Agency (NCA)
UK law firms in a global context 229 –232 , 244
UK legal profession and anti-money laundering 1 –19 ; England and Wales 18 –19 ; Serious and Organised Crime Strategy 2018 2 ; see also UK AML regime
wealth risk, source of 222 –223 , 227 , 243
‘white-wash’ phase 10
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