Money Laundering Training Presentation 2022

Money Laundering Training Presentation 2022

Learning Objectives What is 5MLD? What’s new and what’s changed under 5MLD? What is 6AMLD? What’s new and what’s changed under 6AMLD? Your responsibilities What we should do to get ready Our company’s Anti Money Laundering Copyright 2022 Ahead MG 2

What is 5MLD? The Fifth Money Laundering Directive: 1. Inclusion of Virtual Assets (eg. Crypto currencies) 2. More clarity around PEP risk management and beneficial ownership 3. A common interpretation of what Enhanced Due Diligence means. 4. Identification of prepaid card holders. 5. Information sharing by Financial Intelligence Units. Copyright 2022 Ahead MG 3

What is Money Laundering? the process by which criminals attempt to conceal the identity, source or destination of illicit funds Dirty Money 1. Placement Clean Money 2. Layering Copyright 2022 Ahead MG 3. Integration 4

Four categories of money laundering? Converting or transferring property, knowing it’s derived from criminal activity, to conceal the illicit origin or assist those involved in criminal activity to evade the law Concealing or disguising the true nature, source, location, disposition, movement, rights, with respect to, or ownership, of property knowing it’s derived from criminal activity Acquiring, possessing or using property, knowing at the time of receipt that it was derived from criminal activity or from participating in criminal activity Participating in, association to commit, attempting to commit and aiding, abetting, facilitating and counselling the commission of any of the above Copyright 2022 Ahead MG 5

What is terrorist financing? Where money is raised for an offence that has yet to be committed Difficult to identify Funded from legitimate or apparently legitimate sources Wealthy individuals Commercial enterprises Charities and religious organisations State sponsors Copyright 2022 Ahead MG 6

You make the call: Is it money laundering? “I only deal with other financial institutions so there’s no risk of money laundering" Correct Incorrect Copyright 2022 Ahead MG 7

You make the call: Is it money laundering? “I deal mainly with business accounts so I’m unlikely to encounter money launderers there" Correct Incorrect Copyright 2022 Ahead MG 8

When it goes wrong Deutsche Bank fined 502m for money laundering in Russia Barclays fined 72m for PEP due diligence failures Coutts fined by Swiss and Singapore regulators for AML failings HSBC fined 1.2bn for money laundering Gala Coral pays out 846k for money laundering failings Copyright 2022 Ahead MG 9

What’s new? Tightening rules for prepaid cards Regulation of Virtual currencies National register of Beneficial Owners More clarity around PEP risk management Improved safeguards for transactions to and from high-risk jurisdictions Greater powers for FIUs Copyright 2022 Ahead MG 10

What’s changed? 1. Enhanced PEP risk management 2. Expanded scope – to now cover all the virtual currencies and art dealers 3. Identification of prepaid card holders Copyright 2022 Ahead MG 11

What’s changed? (Cont.) 4. Beneficial ownership 5. Electronic identification 6. More powers for FIUs 7. Enhanced Due diligence – more clarity, more responsibility Copyright 2022 Ahead MG 12

You make the call: Is it True or False? “We work with major credit and financial institutions so we can waive due diligence checks for these FIs. And they should also do the same for us." True False Copyright 2022 Ahead MG 13

You make the call: Is it True or False? “PEPs must still be treated as such for up to 12 months after they have left office" True False Copyright 2022 Ahead MG 14

Penalties 10% of total annual turnover 5 million Cease and desist orders Publicly issued reprimands Financial and reputational damage Copyright 2022 Ahead MG 15

What is 6MLD? The Sixth Anti-Money Laundering Directive: 1. Dual criminality for specified offences and greater co-operation 2. Harmonisation and clarification of predicate offences 3. Extension of criminality to legal persons 4. A tougher punishment regime overall 5. Additional offences, such as aiding and abetting Copyright 2022 Ahead MG 16

When it goes wrong Danske Bank faces 2bn fine for money laundering in Estonia Deutsche Bank fined 150m for dealings with Epstein and AML failings Standard Chartered fined 842m by US and UK regulators for AML and sanctions violations Westpac pays 1.3bn in money laundering case Betway pays record 11.6m for money laundering failures Copyright 2022 Ahead MG 17

What’s new? Dual criminality for specified offences Greater co-operation between member states to prosecute offences Harmonisation and clarification of predicate offences Extension of criminal liability to legal persons and key business leaders A tougher punishment regime overall Additional offences, such as aiding and abetting Copyright 2022 Ahead MG 18

What’s changed? 1. Dual criminality for specified offences 2. Greater co-operation between member states – enabling prosecutions in a single member state 3. Harmonisation and clarification of predicate offences Copyright 2022 Ahead MG 19

What’s changed? (Cont’d) 4. Extension of criminal liability to firms and those in authority – holding those in authority to account for AML failings 5. A tougher punishment regime – increasing minimum prison terms for money laundering from one to at least four years 6. Additional offences to pursue Copyright 2022 Ahead MG enablers or facilitators of money 20

You make the call: Is it True or False? “Honestly, I don’t see what environmental crime has to do with money laundering. It’s not really relevant." True False Copyright 2022 Ahead MG 21

You make the call: Is it True or False? “In future, firms can expect to be held much more accountable for AML compliance failings. Those in authority may face prosecution for poor supervision.” True False Copyright 2022 Ahead MG 22

You make the call: Is it True or False? “As a legal advisor, it is not my job to prevent money laundering. I can’t be expected to scrutinise every client. I don't see what I can do anyway.” True False Copyright 2022 Ahead MG 23

Penalties 10% of total annual turnover 5 million Cease and desist orders Publicly issued reprimands Financial and reputational damage Copyright 2022 Ahead MG 24

Sanctions for legal persons 1.Exclusion from public funding, aid or tenders 2.Temporary or permanent ban from the sector 3.Judicial supervision 4.Enforced closure and winding-up Copyright 2022 Ahead MG 25

Our Anti Money Laundering and Financial Crime Policy 1. Encouraging everyone to get involved 2. Appointing people with a specific responsibility for handling suspicious activity or transactions (MLRO) 3. Co-operating fully with regulators and law enforcement to tackle money laundering and terrorist financing 4. Requiring everyone to read and implement our AML/CTF Policy Copyright 2022 Ahead MG 26

Do Read our Company's AML&FC Policy – make sure you understand the rules and what you need to do Conduct appropriate risk-based due diligence Know how to spot 'red flags' - ie unusual or suspicious activity Make sure you know the name of your MLRO and how to contact them Be aware of high-risk non-EU countries with deficient AML/CTF regimes (those on the 'blacklist') – take extra care with transactions involving people or entities based there Report any knowledge or suspicion of money laundering or terrorist financing immediately Copyright 2022 Ahead MG 27

Don’t x Assume that another colleague, department or company has made the necessary due diligence checks x Make payment transfers to people or entities in high risk non-EU countries without conducting enhanced due diligence x Leave it for someone else to report concerns about suspicious customers or transactions x Delay making reports or wait until you have gathered more evidence - the faster you make your report, the better x Bypass any of our controls to circumvent AML/CTF regulations or assist clients with this – you will be caught! Copyright 2022 Ahead MG 28

What we should do to get ready Awareness, training and information – is everyone aware of the pending changes within the new regulations and its impact on them? (including senior management) Review our current AML/CTF regime and framework – especially awareness of the predicate offences, the risks and typologies, dual criminality for specified offences, and the detection of potential enablers Review our current AML/CTF regime – especially looking at PEPs, high risk jurisdictions and relationships with virtual currency providers Explore Regulatory Technology (RegTech) solutions to deliver more sophisticated monitoring and ease the regulatory burden Put mechanisms in place to improve co-operation with competent authorities in other member states where offences span different jurisdictions Have a clear strategy on how to use technology to improve the ID&V process Resources in place to ensure relevant data is held securely and easily retrievable Monitor and review - benchmarking Copyright 2022 Ahead MG 29

5MLD & 6AMLD and you Discuss: How will 5MLD and 6AMLD impact on our business unit, department, function and/or firm? Key priorities [Allow 15 mins] Copyright 2022 Ahead MG 30

Any Questions?

Next steps Contact [email protected] if you need information or guidance Contact [email protected] if you need to raise concerns Access self-study courses at www.AheadMG.com for further training