The government has recently outlined its proposals to implement the EU 4th Money Laundering Directive. The proposals are set out in draft regulations which will replace the existing Money Laundering Regulations and will be known as The Money Laundering regulations 2017 which will come into effect by 26 June 2017.
The proposals as currently drafted do not expand the types of organisations that must comply with the regulations. It is therefore only remote and non-remote casinos that are directly caught by The Money Laundering Regulations. However in a warning to the gambling sector the government has stated that it will review the matter on an annual basis to determine whether the gambling sector as a whole is doing enough to counter the risk of money laundering and terrorist financing.
On this basis the Gambling Commission has issued a statement to remind all organisations that it regulates of their obligations under: The Gambling Act 2005; The License Conditions and Code of Practice (LCCP), and the Proceeds of Crime Act 2002 (POCA). It has also updated its guidance accordingly.
We have identified 6 things which as a minimum all organisations across the sector should do to help prevent their organisations being used to further economic crime. Organisations should therefore:
Undertake regular risk assessments to understand the nature and scale of money laundering and financial crime risks it faces. This will enable organisations to take a risk-based approach.
Have a policy in place setting out how the organisation will meet its requirements to meet the first licensing objective under the Gambling Act 2005 to prevent gambling from being a source of crime or disorder, being associated with crime and disorder, or being used to support crime. The policy should identify relevant roles and responsibilities within the organisation including establishing a ‘Nominated Officer’ role or designating a senior manager with overall accountability for anti-money laundering compliance.
Understand the obligations for them and their staff under the Proceeds of Crime Act 2002 and raise awareness of those obligations through training and publicity. With criminal penalties for individual staff of up to 14 years in prison and significant regulatory action against organisations including revocation of its license to operate it is vital that the organisation and its staff understand their responsibilities.
Have a response plan in place setting out how incidents of known or suspected Money Laundering (Suspicious Activity Reports SARs) are reported to the National Crime Agency and where appropriate consent is sought for the transaction. The response plan should also cover how the organisation will prevent prejudicing any subsequent investigation by Law Enforcement Agencies (LEAs).
Understand who they are doing business with by undertaking effective customer and supplier due diligence prior to the commencement of a business relationship. They also need to be able to monitor customer account activity and where necessary terminate accounts.
Have effective whistleblowing procedures in place so that staff feel able to raise concerns, know who and when to report suspicions to and feel confident that they will not be victimised for raising concerns.
Money Laundering is just one financial crime risk that organisations face. We would therefore urge organisations to take a holistic view to the management of all financial crime risks such as fraud, cyber-crime, data theft, bribery and corruption by implementing a coherent strategy across the organisation. Please see our video which explains this approach in more detail.
Most organisations have the capability to implement a successful fraud strategy but usually need a point in the right direction from a specialist resource. We hope the above will help organisations make a start down the right road. For full details of all the elements of an effective fraud strategy visit our unique Fraud Management Resource Centre.
Fraud Management Resource Centre provides specialist support in the form of on-line self-help guidance and tools.
The above article was written by Neil Tyson, creator of Fraud Management Resource Centre which provides specialist support in the form of on-line up to date self-help guidance and tools. Neil is an accredited corner fraud specialist with over 20 years’ cross industry experience in the design and implementation of robust counter fraud strategies; he has also led major fraud, money laundering and asset tracing investigations.
Neil has used all his experience to devise and write an online package (The Fraud Management Resource Centre) that enables users to put the different building blocks of their fraud strategy in place. The Self-Assessment Tool provides a unique focus for identifying areas for improvement as well as also providing a benchmark from which progress can be measured. From that self-assessment, organisations can implement a coherent strategy using the other tools within the package in the safe knowledge that they are doing so based on up to date information and cross-industry best practice.