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Treasury Approved CCAB Anti-Money Laundering Guidance Issued

Mercia Blog CCAB draft anti-money laundering

On the 7th March 2018 the CCAB issued the final HM Treasury approved version of the Anti-money guidance for the accountancy sector. Whilst there are a lot of changes due to a general tidying up, for example using the word country instead of jurisdiction, there are not many of more significance.

However, some points are worth noting as follows:

Training and relevant employees

The definition or a relevant employee has been changed to specifically include partners. Previously, it appeared that, whilst common sense dictated that partners needed to know about all the Regulations and requirements, the strict interpretation of the requirements seemed only to apply to employees and not partners.

This means that both partners and staff will need to have training on the requirements of the money laundering and terrorist finance (MLTF) regime. Additionally that training must include data protection requirements and consideration should be given as to whether there is some sort of assessment of the level of knowledge and understanding the relevant employees have obtained.

Sole practitioner

The dispensations for sole practitioners who have no employees have been brought together in Section 3.2, rather than being scattered through the document. A sole practitioner with no employees is not required to appoint an MLNO or senior management responsible for the Regulations. This makes sense of course, because of course the sole practitioner will have both of those responsibilities him or herself.

Additionally, sole practitioners with no employees need not implement regular independent reviews unless required by their AML supervisor. This dispensation seems a little strange to me, as it might be thought that someone in sole charge of a business could benefit from an independent review of their files, but perhaps this was felt too onerous in a business confined to just one individual. In practice though, it seems likely that a sole practitioner may still want to periodically assess their compliance with the Regulations and may therefore engage a third party to carry out such a review.

FCA guidance on who is a PEP

The FCA issues useful guidance on who is or isn’t to be regarded as a Politically Exposed Person (PEP) and the final version of this guidance cross refers the user to this, saying that it may be useful. This is a sensible inclusion, as there are often questions as to which types of people fall into the definition.

EDD for PEPs

The final version of the guidance includes more nuanced information on understanding the different levels of enhanced due diligence (EDD) required for a PEP. Although both UK and foreign PEPs are now caught by the definition there is a clear understanding that certain PEPs are less risky than others. The guidance points out though, that even UK PEPs may be regarded as higher risk if, for instance, there is evidence of concern such as involvement in the expenses scandal or indications of acceptance of inducements or similar.

The final guidance also makes it clear that a family member of a PEP ceases to require EDD as soon as the PEP ceases to hold the relevant role, not 12 months after as is the case for the PEP themselves.

Risk assessment and CDD

There is emphasis on the fact that risk assessment must not be done by using a “tick-box” approach, but must consider all the relevant risk factors and how they might interact.

Client identification for a company or LLP has a small clarification to indicate that any beneficial owner or individual who exercises control over management must be identified (and verified on a risk-sensitive basis). This means that whether you verify the identity of shareholders/directors or other beneficial owners will be a matter of consideration based on the risks in the circumstances.

There is also clarification that when seeing a passport or other document for identification purposes this should be recent, as well as valid.

Bank statements printed from the internet

The final version of the guidance removes the prohibition on using bank statements printed from the internet as part of the CDD procedures. No doubt this is due to the dearth of statements sent by the bank in the post! However, the accountant is still required to consider the likely veracity of such information before deciding whether it is suitable to accept it.

Secondees and outsourcing

The information on this has now been moved to an appendix, presumably to ease reading of the document for those not affected.

Mercia’s Money Laundering Compliance Manual

The Mercia Money Laundering Compliance Manual has already been updated for the draft CCAB money laundering guidance and will be updated for the changes made to the final version.  Subscribers will automatically receive a copy of the updated manual as part of their subscription.