Chapter MLR3C10160
| Published date | 26 April 2016 |
| Record Number | MLR3C10160 |
| Court | HM Revenue & Customs |
The very nature of their business means that money transmitters are exposed to the risk that the transactions that they are asked to perform will be for the purposes of laundering the proceeds of crime or the transfer of funds used to finance terrorism. The degree of risk will vary for each business according to a number of factors the chief ones being, their customer profile, destination of funds, delivery channels, size of transactions undertaken.
Regulation 20(1) MLR 2007 requires businesses to establish appropriate risk sensitive policies and procedures to prevent money laundering. These are:
* customer due diligence measures and ongoing monitoring
* reporting
* internal control
* risk assessment and management
* monitoring and management of compliance
* internal communication of policies and procedures
Additionally Regulation 20(2) requires businesses to (a) apply the above policies and procedures so that they identify and scrutinise unusually large or complex transactions that could be connected with money laundering or terrorist financing and (b) to appoint a Nominated Officer (except where the business is run by a sole trader with no employees) under Part 7 of the Proceeds of Crime Act 2002 and the Terrorism Act 2000. Information that results in suspicion or provides reasonable grounds for suspicion of money laundering or terrorist financing must be reported to the Nominated Officer. The Nominated Officer must then consider the information and decide if a report should be sent to the Serious Organised Crime Agency.
Regulations 7(3) and 8(3) requires businesses to determine the extent to which customer due diligence and ongoing transaction monitoring is carried out on a risk sensitive basis having regard to the type of customer, business relationship, product or transaction.
In order to check that an MSB is complying with the Regulations it should be borne in mind that the Regulations do not prescribe the procedures or policies that a business must put in place to prevent their business being used to launder money of finance terrorism. It requires them to put in place systems that are “appropriate and risk-sensitive”.
There is therefore no uniform approach that applies and each business is required to apply measures that fit the circumstances of their business. Larger more sophisticated businesses may have detailed policy statements and risk analysis documents in place which fully explain the measures that they adopt in the business to...
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