Compliance and Money Laundering Investigations in the EMEA Region – Global Investigations Review – GIR

Money laundering remained in the minds of people last year, with the leak of the Paradise Papers following the flight of the Panama Papers in 2016. This led the European Parliament to set up a new investigation committee on businesses and individuals who flout the rules of money laundering, tax evasion and tax evasion

(4MLD), which incorporates significant changes to the European Anti-Money Laundering Framework (AML). Not content with a transformation, EU bodies are finalizing the Fifth Money Laundering Directive (5MLD).

The last 12 months have also seen the coming into force of the UK Criminal Finance Act. the offense of incapacity to prevent the facilitation of tax evasion. In a post-Brexit context, the UK has introduced a sanctions bill to allow the application of sanctions once it leaves the European Union.

Global efforts continue with the Financial Action Task Force (FATF) badessing compliance with the international set of common standards for prevention and protection against money laundering, financing terrorism and other threats to the integrity of the international financial system

must act to ensure that they have adequate and up-to-date compliance systems to minimize their exposure to risks. Such action is particularly important in a regulatory and law enforcement landscape that is increasingly hostile to alleged money launderers and their facilitators. Global politics continues to be translated into a set of measures and tools for the authorities and in favor of greater coordination and cross-border cooperation

What is the money laundering?

Money laundering is the process by which unlawful sources of property obtained or generated by criminal activity are hidden to obscure the connection between the funds and the original criminal activity. Laundered funds often come from crimes such as corruption, drug smuggling, human trafficking, illegal arms sales and sanctions.

Money laundering is distinct from other financial crimes such as terrorist financing and tax evasion. . All three exploit similar vulnerabilities in the legal and financial systems to conceal money from regulators and authorities.

United Kingdom

In recent years, European authorities have begun to adopt more aggressive approaches to the US to investigate and prosecute money launderers. institutions that facilitate money laundering.

These efforts are perhaps clearer in the UK, which seeks to get rid of an emerging image as a repository of dirty money. In 2016, the United Kingdom hosted the Anti-Corruption Summit; last year, it released its 2017 Anti-Corruption Strategy to 2022. The strategy sets out six priorities:

• reducing the internal threat in high-risk domestic sectors (such as borders, prisons, police and defense)
• the integrity of the United Kingdom as an international financial center;
• promoting integrity in the public and private sectors;
• reduce corruption in government procurement and subsidies;
• improve the business environment globally; and
• collaborate with other countries to fight corruption.

The UK has announced a number of plans to achieve this goal, including the creation of a public registry of beneficial ownership information for foreign companies. , or bid on UK central government contracts. It will establish an Economic Crime Ministerial Strategic Council to oversee strategic priorities and overall performance, and align funding and capacity development with economic crime.1 In addition, the government has just launched the Economic Crime Control Office. the fight against money laundering. OPBAS will serve on the Financial Conduct Authority (FCA) and will directly supervise 22 LCB supervisors in the accounting and legal profession in the UK.

The FCA followed the statement in its 2016-2017 business plan to pursue money laundering is one of its top priorities. In January 2017, the agency announced that it had fined Deutsche Bank for £ 163 million for major failures in the bank's AML framework – the heaviest penalty for AML checks insuffisants3. The FCA explained that the amount of the fine reflected failures of the Deutsche Bank. The bank has benefited from a 30% discount for agreeing to agree early in the investigation and for its outstanding cooperation and agreement for a major remediation program. ladder. The action was significant in the extent of collaboration between FCA and the Financial Services Department of the State of New York, which fined the bank $ 425 million US. On a smaller scale, in January 2018, the FCA fined Interactive Brokers (UK) Limited (IBUK) just over £ 1 million for failing to report suspicious transactions. Mark Steward, Director of Market Enforcement and Control at FCA, said: "Companies not only have the primary responsibility to report suspicious behavior in our financial markets, but they also have the obligation to ensure that their trading systems are not used. criminality. IBUK systems were inadequate and ineffective in dealing with potentially suspicious transactions.

The government should also make greater use of deferred prosecution agreements (DPAs). ODA, another US import, was introduced in the UK in February 2014 under the provisions of Schedule 17 of the Crimes and Courts Act, 2013. They are available (and are used by) the Bureau of Serious Fraud (SFO) actions against companies by filing lawsuits in exchange for certain conditions, including fines and behavioral changes. The OFS has obtained four APDs to date. None of them has been instituted in connection with money laundering offenses, but the first DPA, concluded with Standard Bank plc, is the result of a self-declaration at the same time. 39; FSO after the bank has filed a report of suspicious activity according to the product. Crime Act 2002 (POCA). This link, as well as the fact that DPAs can be concluded for money laundering offenses under the POCA, is reason enough for UK companies to ensure that their AML compliance systems are robust, up to date and comprehensive enough to detect The Disciplinary Tribunal for Lawyers has also played an active role in the pursuit of money laundering, a court that fined Clyde & Co for failing to meet its obligations under the Regulations. on money laundering of 2007 (applicable at the time) .5

British legislation

The British government has also been active on the legislative front, with a number of important new measures.

Criminal Offenses Financing Act

Act) came into force on September 30, 2017. The Act contains measures to improve the ability of UK enforcement agencies to recover the proceeds of crime, prevent the financing of terrorism and kill money laundering and tax evasion. The law proposes important changes to UK anti-money laundering laws and introduces new criminal offenses for non-prevention of tax evasion.

• The law created the possibility for competent authorities to obtain unexplained orders. January 2018. Prosecutors and regulators may ask the High Court that a UWO requires a person or entity, either in the UK or abroad, suspected of 39 be involved in serious criminality or simply a "politically exposed person", explain the origin of property of a value greater than £ 50,000 if such property appears disproportionate to their legal income. A failure to provide a convincing answer would give rise to a presumption that property can be recovered as proceeds of crime.

The National Crime Agency (NCA) recently reported6 that it had obtained two UWOs on two properties worth £ 22 million that would ultimately be held by a PEP. In addition, interim freeze orders have been obtained, which means that the properties can not be sold, transferred or dissipated while the ordinances are in effect.

• The Act extends the time from 31 days to six months for obtaining consent for suspicious activity reports (SARs) filed under the COGOA, with the following: court approval. POCA requires regulated companies, such as banks and insurance companies, to file RFPs with the ANC when they suspect that a transaction may relate to the proceeds of crime and allow them to ask for their consent to continue the transaction. Under the regime, if the ANC refuses consent within seven days, the moratorium period intervenes, leaving investigators time to gather evidence to determine whether other measures, such as restricting funds, should be taken. The NCA has long considered that 31 days were not enough, so the new law allows to extend the moratorium period of 31 days each, up to a total period not exceeding six months.

• compliance with money laundering investigations (they are already available for fraud investigations.)
• The Act creates mechanisms that will allow POCA-regulated entities to share information about cases alleged money laundering. This approach has already been tested in the Joint Money Laundering Intelligence Working Group (JMLIT), where banks and the NCA share information. During the second quarter of last year, such sharing allowed 37 people to be arrested on suspicion of money laundering as well as the closure of 114 suspicious bank accounts. law allows for much wider sharing and provides NCA information in a common disclosure report (known colloquially as "super SAR").

Reporting entities may submit a joint report to fulfill their respective individual reporting obligations and to avoid multiple and duplicative reports relating to a common situation. Until now, reporting entities have been reluctant to file joint reports since their interests must align before a single report can be submitted.

• The Act creates a new offense, applicable against corporations, of non-hindrance of evasion tax facilitation. A company will commit a criminal offense if it does not prevent a person acting for or on behalf of the company from committing an offense of tax evasion in the United Kingdom or an equivalent offense under foreign laws, when There is a link with the United Kingdom. The offense carries the risk of an unlimited fine and other penalties.

Money Laundering Regulations

Anti-money laundering laws in the United Kingdom and the European Union have all changed in 2017, since 4MLD was to be implemented by Member States . June 2017.8

4MLD has been implemented in the UK by the 2017 Money Laundering, Terrorist Financing and Remittance (Payor Information) Regulations. It came into force on June 26, 2017 and repealed

• Enhanced Due Diligence (ESD) now applies to National Politically Exposed Persons (PEPs) (such as Members of Parliament, judges, etc.) as well as To foreign PEPs. Companies should apply a risk-based approach to close family members and close relatives of PEPs, as well as to older PEPs. In July 2017, the FCA issued guidelines for financial services companies on how to conduct risk badessments for certain categories of PEPs9. These guidelines and 4MLD state that transactions or business relationships involving PEPs should not be denied. the individual or his close relative is a PEP; a company must badess the level of risk badociated with that customer and then determine the extent to which ESD is to be performed.
• HM Revenue and Customs now maintains a register of beneficial owners of trusts with tax implications. The trustees are required to update the register annually to identify the beneficiaries, trustees and other significant trustees of the trust.
• Companies must now provide important identification information to regulated firms prior to transactions. This is based on the creation by the government last year of a register of persons with significant control (PSC) that implements a 4MLD requirement that companies and other legal entities must hold and provide adequate, accurate and up-to-date information on their beneficial owners. the competent authorities and any other person or organization that can demonstrate a legitimate interest.
• The threshold of turnover to exempt persons engaged in financial activity from occasional to very limited LAB requirements has been raised to £ 100,000. Due diligence (SDD) is no longer available for a predefined list of clients or transactions. Instead, companies should now consider in each case whether the client and the transaction present a sufficiently low risk to justify the use of SDS. The highlighting of the risk badessment performed is important, especially when the use of the DDS has been decided under the new 4MLD.
• Penalties for breach of the regulations have been increased. The 2007 regulation included a criminal offense, punishable by a fine and up to two years' imprisonment, for violation of a relevant condition. In addition to this offense, which is continued under the new regime, the 2017 regulations create a new criminal offense when a person makes a false or misleading statement in order to comply with a requirement that is applicable to him, with potential liability for a fine Absence of prevention of economic crimes

  Consultation of the United Kingdom Department of Justice to consider a law reform to criminalize a more general breach of the law. economic crime prevention was closed in March 2017.

  should reflect the offense of failure to prevent bribery in the Bribery Act, and the new law preventing the prevention of tax evasion, and apply it to a list of crimes, including money laundering, false accounting and fraud. As in the case of the facilitation of tax evasion, the company would be able to demonstrate that it had put in place reasonable procedures to prevent the crime, or that it was not necessary. It was unreasonable to expect the company to put such procedures in place. The Solicitor General of the United Kingdom, MP Robert Buckland, recently stated that there is a strong case for the creation of a new criminal offense for economic misconduct10. in September 201711, in which it affirms its commitment, after Brexit, to maintain and develop a partnership with the Member States of the European Union in terms of sanctions, to fight against organized crime and to coordinate their use as a & nbsp; Foreign policy tool. . In October 2017, the sanctions and anti-money laundering (Sanctions Bill) bill was introduced in Parliament to give the UK government the necessary legal powers to enforce post-Brexit sanctions and maintain existing sanctions regimes, including by EU law. Currently, the implementation of sanctions by the United Kingdom is largely based on the 1972 European Communities Act and the legal basis for its implementation will no longer be available after Brexit. it deems it appropriate, for:

  • to comply with the obligations of the UN and other international obligations
  • in the interest of national security or international peace and security ;
  • to prevent terrorism; or
  • to promote its own foreign policy objectives.

  The new framework would allow the government to subject a person to sanctions when he has reasonable grounds to suspect that person to be involved in a specific activity. Individuals may challenge this designation, including seeking review by the court. Sanctions regulations must be reviewed annually and a person's appointment must be reviewed every three years with a positive obligation to revoke or change it when there is no longer any reason to suspect that this person is involved in the activity in question and the government no longer considers it appropriate for this person to be appointed.

  The framework aims to ensure continuity and coordination with the United Nations and other international sanctions regimes, but differences between the United Kingdom and the United Kingdom may remain. with its partners, the UK adopting a harder or more flexible regime than that of the EU and other partners. This could create additional compliance burdens for companies operating in the UK. This would encourage the government to observe the continuity of sanctions policies with its partners.

  Continental Europe

  Governments in other European countries continued to adopt American approaches to targeting money launderers and their facilitators. As mentioned above, the 28 EU Member States were required to transpose the 4MLD into national law by 26 June 2017. 12 Shortly after this date, the EU Justice Commissioner contacted 17 Member States who were concerned about not complying fully with this deadline. . The 4MLD was implemented by the deadline in the United Kingdom, France, Germany, Italy, Spain, Slovenia, Sweden, Austria, Belgium, the Czech Republic and Croatia. 5MLD has also progressed through the EU institutions. A political agreement on the 5MLD was concluded in December 2017 between the European Parliament and the Commission and it must be adopted by the European Parliament in April this year, the European Commission should approve it later in the year. year, after which an 18-month period will be implemented before implementation by the Member States. The new directive will address a number of areas, including stronger ESD for high-risk country clients, better intra-EU information sharing, national current account registers (visible only to authorities), efforts to minimize anonymous payments. prepaid debit cards and extension of the scope of the AML regulation to virtual currencies, tax services and works of art

  The European Parliament's PANA Committee, created following the Panama Papers leak in 2016 , publishes its final report in November 2017, which included the following recommendations:

  • publication of national bank account records and transaction statistics with tax havens and high-risk countries;
  • publication of country-by-country reports for large enterprises; commercial transactions with legal structures in tax havens where beneficial owners can not be identified;
  • severe penalties against banks and intermediaries who are there, voluntarily and systematically involved in the illegal tax evasion and money laundering; and
  • the inclusion of some EU Member States in the list of non-cooperative tax jurisdictions of the EU.

  Some of these recommendations have been reflected in the 5MLD measures, such as increased cooperation between and among authorities As a result of the Panama Papers leak, 13.4 million documents spanning several decades (called the "Paradise Papers") were released late last year, exposing the financial affairs of many multinationals, politicians and other wealthy individuals. In February 2018, the Conference of Presidents of the European Parliament voted in favor of setting up a new committee to investigate money laundering and tax evasion practices. exposed in the Paradise papers. It is expected that the commission will complete the work of the NAPA Committee and make recommendations for increased coordination between EU countries and third countries

  Middle East

  The FATF continues to identify Three Middle East states: have strategic deficiencies in their AML regimes: Iraq, Syria and Yemen.15 None of them has fully implemented systems to address their deficiencies in AML. However, significant developments have taken place.

  In Syria, due to the security situation, the FATF could not make a site visit to badess whether the process of implementing the reforms and actions needed for its LBC plan of action is in progress. The FATF continues to monitor Syria, but the current potential for progress seems limited. Yemen poses the same problems: the FATF has not been able to visit the site since 2014.

  While Iraq is still considered a high-risk jurisdiction, the FATF recognizes that Iraq has made substantial progress towards improving its AML regime, including by adequately criminalizing money laundering and terrorist financing and by establishing an adequate legal framework for identifying, locating and freezing the badets of terrorists (among others). The FATF announced in February 2018 that it would carry out a site visit to confirm the implementation of the reforms.16

  Across the Middle East, however, significant progress has been made in the development of sophisticated anti money laundering. The FATF considered Afghanistan last year as a jurisdiction no longer subject to its overall AML compliance process, with the FATF noting that the country "has established the legal and regulatory framework to comply with its commitments in its action plan on strategic deficiencies the FATF had identified in June 201217. In November 2017, the FATF continued to suspend countermeasures for Iran, given its political commitment. to address its strategic failures in AML and the relevant actions it had taken. Since then, Iran has put in place a cash reporting regime and has submitted draft amendments to its LAB laws. Although Iran's plan of action has expired with a majority of actions still incomplete, the FATF decided in February 2018 to continue suspending countermeasures because Iran has a bill before Parliament. FATF to consider next steps to be taken in June 2018.18

  Africa

  Since the recent FATF update in 2018 on the ongoing review of anti-money laundering standards, Ethiopia has been identified as the only African nation on the list of FATF jurisdictions. In February 2017, Ethiopia made a political commitment to work with the FATF and the East and Southern Africa Anti-Money Laundering Group to strengthen the economy. effectiveness of its anti-money laundering framework. fully integrate business and non – financial professions into its anti – money laundering regime and implement the results of the national risk badessment.

  It is clear that some African states are increasingly committed to improving their efforts to combat money laundering, but much more needs to be done to effectively combat money laundering. the continent.

  Financial services firms and their advisors should put in place robust and comprehensive compliance policies to detect and prevent money laundering and ensure that they continue to comply with all legislations LAB in force, particularly given the speed of these laws. change. Failure to comply with anti-money laundering laws can be a costly mistake, as evidenced by ongoing efforts to enforce and penalize the FCA. On the other hand, effective systems can not only prevent failures, but also serve as a defense against the findings of crime by rogue employees. There is therefore no reason not to invest the time and resources needed to do it right.

  Notes

  1 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/667221/6_3323_Anti-Corruption_Strategy_WEB.pdf.

  2 www. gov.uk/government/news/uk-launches-new-anti-money-laundering-watchdog.

  3 www.fca.org .uk / news / press releases / fca-fines-deutsche-bank-163- million-fight against money laundering-checks-failure.

  4 www.sfo.gov.uk/2017/01/17/sfo- complete-497-25m-deferred-prosecution-agreement-rolls-royce-plc.

  5 http://sra.org.uk/consumers/solicitor-check/460690.article?Decision=2017-03-21.

  6 www.nationalcrimeagency.gov.uk/news/1297-nca-secures-first-unexplained-wealth-orders.

  7 www.nationalcrimeagency.gov.uk/about-us/what-we-do/ economic crime / money laundering common-intelligence-task-force-jmlit.

  8 http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=OJ:JOL_2015_141_R_0003&from=ES.

  9FG 17/6 Treatment of politically exposed persons for the purpose of combating money laundering.

  10 www.independent.co.uk/news/uk/politics/failing-to-prevent-economic-crime-robert-buckland-solicitor-general- consultation-a8262396.html

  11HM Government – Foreign Policy, defense and development – A partnership document for the future. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/643924/Foreign_policy__defence_and_development_paper.pdf

  12 Financial Times 23 July 2017 – www.ft.com/content/3ea2f836-6f92- 11e7 -aca6-c6bd07df1a3c.

  13 www.bbc.co.uk/news/world-41880153.

  14 www.law360.co.uk/financial-services-uk/articles/1008901/senior-eu- legislators-vote-for- set up-paradise-papers-probe.

  15 www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-february-2018.html.[19659002] 16 Ibid.

  17 www.fatf-gafi.org/countries/ac/afghanistan/documents/fatf-compliance-june-2017.html.

  19 www.fatf-gafi.org/countries/di/ iran / documents / public-statement-February-2018.html.

  20 www.fatf-gafi.org/publications/high-riskandnon-cooperativejurisdictions/documents/fatf-compliance-february-2018.html.

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