
Contents
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What is Money Laundering? What is Money Laundering?
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Placement Placement
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Layering Layering
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Integration Integration
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United Kingdom Policy Drivers United Kingdom Policy Drivers
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The UK’s Fight Against Money Laundering: The Policy Backdrop The UK’s Fight Against Money Laundering: The Policy Backdrop
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International Nature of the Fight against Money Laundering International Nature of the Fight against Money Laundering
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The Financial Action Task Force The Financial Action Task Force
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The 40 Recommendations The 40 Recommendations
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Terrorist financing Terrorist financing
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Identifying and responding to new threats Identifying and responding to new threats
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FATF and the UK FATF and the UK
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Non-cooperative countries and territories Non-cooperative countries and territories
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Law and Regulation Law and Regulation
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Other Developments Driving EU Legislation Other Developments Driving EU Legislation
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The First and Second Money Laundering Directives The First and Second Money Laundering Directives
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The Third Money Laundering Directive The Third Money Laundering Directive
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Customer due diligence Customer due diligence
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Beneficial owner Beneficial owner
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Simplified due diligence Simplified due diligence
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Enhanced due diligence Enhanced due diligence
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Politically exposed persons Politically exposed persons
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Performance by third parties Performance by third parties
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Reporting obligations Reporting obligations
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Record keeping Record keeping
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Enforcement and implementing measures Enforcement and implementing measures
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The European Regulation on FATF Special Recommendation 7 The European Regulation on FATF Special Recommendation 7
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UK Legislation UK Legislation
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Proceeds of Crime Act 2002 Proceeds of Crime Act 2002
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Criminal property/criminal conduct Criminal property/criminal conduct
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Reporting as a defence to a money laundering offence Reporting as a defence to a money laundering offence
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The regulated sector The regulated sector
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Objective test Objective test
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Reporting by firms Reporting by firms
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Where consent is urgently needed Where consent is urgently needed
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Tipping off Tipping off
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Protected disclosures Protected disclosures
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Penalties for breach of PoCA Penalties for breach of PoCA
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The Terrorism Act 2000 (‘TA’) (as amended by the Anti-terrorism, Crime and Security Act 2001) The Terrorism Act 2000 (‘TA’) (as amended by the Anti-terrorism, Crime and Security Act 2001)
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Changes to PoCA introduced by SOCPA Changes to PoCA introduced by SOCPA
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Case law and PoCA Case law and PoCA
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The Money Laundering Regulations 2003 The Money Laundering Regulations 2003
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The Money Laundering Regulations 2007 The Money Laundering Regulations 2007
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Application of the MLR 2007 Application of the MLR 2007
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Criminal offence Criminal offence
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Duty to identify Duty to identify
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Offences committed by a body corporate Offences committed by a body corporate
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Identification procedures Identification procedures
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Identification in practical terms Identification in practical terms
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Identification procedures should be risk-based Identification procedures should be risk-based
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Customer due diligence Customer due diligence
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Exceptions to the duty to identify Exceptions to the duty to identify
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Long-term insurance Long-term insurance
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Record-keeping, procedures, and training Record-keeping, procedures, and training
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Appointed representatives Appointed representatives
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Internal reporting procedures Internal reporting procedures
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The FCA Anti-money Laundering Regime The FCA Anti-money Laundering Regime
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Risk-based regulation Risk-based regulation
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Registered businesses Registered businesses
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Supervision Supervision
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Enforcement Enforcement
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Power to impose civil penalties Power to impose civil penalties
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Criminal offences Criminal offences
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Taking Money Laundering Seriously Taking Money Laundering Seriously
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FCA Rules Relating to Anti-money Laundering FCA Rules Relating to Anti-money Laundering
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FSA Enforcement FSA Enforcement
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Themes from FSA Final Notices Themes from FSA Final Notices
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The Joint Money Laundering Steering Group Guidance Notes The Joint Money Laundering Steering Group Guidance Notes
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The status of the JMLSG Guidance The status of the JMLSG Guidance
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The revised JMLSG Guidance The revised JMLSG Guidance
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JMLSG Guidance—risk-based regulation JMLSG Guidance—risk-based regulation
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Identifying and assessing the risks Identifying and assessing the risks
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Design and implementation of controls Design and implementation of controls
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Monitor and improve operation of control Monitor and improve operation of control
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Judging firms against their own standards Judging firms against their own standards
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JMLSG Guidance—CDD JMLSG Guidance—CDD
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JMLSG Guidance—suspicious activities, reporting, and data protection JMLSG Guidance—suspicious activities, reporting, and data protection
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JMLSG—record-keeping, procedures, and training JMLSG—record-keeping, procedures, and training
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Looking Forward: 4MLD Looking Forward: 4MLD
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Conclusions Conclusions
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Appendix I Financial Conduct Authority Handbook (Extracts) Appendix I Financial Conduct Authority Handbook (Extracts)
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Senior Management Arrangements, Systems And Controls 1 Annex 1 Senior Management Arrangements, Systems And Controls 1 Annex 1
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Senior Management Arrangements, Systems And Controls 3 Senior Management Arrangements, Systems And Controls 3
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Systems and controls in relation to compliance, financial crime and money laundering. Systems and controls in relation to compliance, financial crime and money laundering.
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Appendix II Summary of UK Legislation Appendix II Summary of UK Legislation
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11 Money Laundering and Financial Crime1
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Published:March 2014
Cite
Extract
What is Money Laundering?
The October 2004 UK anti-money laundering policy document2 adopted a practical description of what constitutes money laundering. It is:
a term generally used to describe the ways in which criminals process illegal or ‘dirty’ money derived from the proceeds of any illegal activity (eg the proceeds of drug-dealing, human trafficking, fraud, theft or tax evasion) through a succession of transfers and deals until the source of illegally acquired funds is obscured and the money takes on the appearance of legitimate or ‘clean’ funds or assets.
The contributors to Chapter 11 were assisted by Mark Chalmers, Norton Rose Fulbright LLP.
HM Treasury, Anti-Money Laundering Strategy (October 2004).
In the UK, the legal definition of money laundering is provided by the Terrorism Act 2000 and the Proceeds of Crime Act 2002 (‘PoCA’). The definition in those Acts is relied on by both the Money Laundering Regulations 20073 (‘MLR 2007’) and the Financial Conduct Authority’s (‘FCA’) Handbook.4 In summary, the PoCA definition provides that a person commits the offence of money laundering if he:
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