Argyll and Bute Council Constitution - Annex 2 - Anti Money Laundering Procedure

We will do all it can to prevent the Council and its staff being exposed to money laundering, identify the potential areas where it may occur, and comply with all legal and regulatory requirements in regard to the reporting of actual or suspected cases.

Key Issues

• The Council is committed to the prevention, detection and reporting of money laundering
• All employees must be vigilant for the signs of money laundering
• Any employee who suspects money laundering activity must report this promptly to the Money Laundering Reporting Officer (MLRO)
• Where the Council is carrying out relevant business then the Client Identification Procedure must be followed.

1. Introduction

1. The Proceeds of Crime Act 2002 (‘the Act’) consolidated, updated and reformed the criminal law with regard to Money Laundering.
    
2. The Money Laundering Regulations 2007 came into force in December 2007 and required local authorities to put in place suitable anti-money laundering controls.
    
3. This policy has been designed to introduce safeguards to help identify and report on instances where money laundering is suspected and sets out procedures which must be followed to enable the Council to comply with its legal obligations.

2. Scope of the Procedure

1. This procedure applies to all employees of the Council and aims to prevent criminal activity through money laundering. 

The key requirement on employees is to promptly report any suspected money laundering activity to the Money Laundering Reporting Officer (MLRO) using the reporting to money laundering reporting officer form. 

3. What is Money Laundering?

1. Money laundering means exchanging money or assets that were obtained criminally for money or assets that appear to be from a legitimate source.

Money laundering offences include:

• concealing, disguising, converting, transferring criminal property or removing it from the UK (Section 327 of the Act)
• entering into or becoming concerned in an arrangement which you know or suspect facilitates the acquisition, retention, use or control of criminal property by or on behalf of another person (Section 328 of the Act)
• acquiring, using or possessing criminal property (Section 329 of the Act)

There are also two secondary offences:

• failure to disclose any of the three primary offences above; and
• 'tipping off' whereby somebody informs a person or persons who are, or who are suspected of being involved in money laundering, in such a way as to reduce the likelihood of their being investigated or prejudicing an investigation.
   

2. Any member of staff could be caught by the money laundering provisions, if they suspect money laundering and either become involved with it in some way and/or do nothing about it.
    
3. While the risk to the Council of contravening the legislation is low, it is important that all employees are familiar with their responsibilities as criminal sanctions may be imposed for breaches of the legislation.
    
4. Details of any cash payments of over £1000 must be reported to the MLRO.

4. The Money Laundering Reporting Officer (MLRO)

4.1   The officer nominated to receive disclosures about money laundering activity within the Council is the Governance, Risk and Safety Manager – Iain Jackson.

5. Reporting Procedures

1. Any employee who suspects money laundering activity must report their suspicion promptly to the MLRO, firstly by discussing their suspicion with the MLRO and then by submitting the report to the MLRO using the disclosure form – part 1, attached at Appendix A.
    
2. The employee must follow any directions given by the MLRO, and must not make any further enquiries into the matter or take any further steps in any related transaction without authorisation from the MLRO.
    
3. The employee must not disclose or otherwise indicate their suspicions to the person suspected of the money laundering. They must not discuss the matter with others or note on the file that a report has been made to the MLRO in case this results in the suspect becoming aware of the situation.
    
4. The MLRO must promptly evaluate any disclosure report, to determine whether it should be reported to the National Crime Agency (NCA).
    
5. The MLRO must promptly report the matter to NCA, on their standard report form and in the prescribed manner.
    
6. The MLRO will commit a criminal offence if they know or suspect, or have reasonable grounds to do so, through a disclosure being made, that another person is engaged in money laundering and they do not disclose this as soon as practicable to the NCA.

6. Client Identification Procedure

1. Where the Council is carrying out 'relevant business' and as part of this
    

• forms an ongoing business relationship with a client;
• undertakes a one-off transaction involving payment by or to the client of £10000 or more;
• undertakes a series of linked one-off transactions involving total payment by or to the client(s) of £10000 or more;
• it is known or suspected that a one-off transaction (or a series of them) involves money laundering;
• then the Client Identification Procedure (as set out below) must be followed before any business is undertaken for that client.

Unlike the reporting procedure, the client identification procedure is restricted to those operating relevant business i.e. Financial Services and Legal Services. This requirement does not apply if a business relationship with the client existed before 1st March 2004.

2. Where the 'relevant business' is being provided to another public sector body then you must ensure that you have signed, written instructions on the body's headed paper before any business is undertaken.
    
3. Where the 'relevant business' is not for a public sector body, then you should seek additional evidence of identity, for example: checking with the organisation's website to confirm their business address; conducting an on-line search via Companies House; seeking evidence from the key contact of their personal identity and position within the organisation.
    
4. With instructions from new clients, or further instructions from a client not well known to you, you may wish to seek additional evidence of the identity of key individuals in the organisation and of the organisation itself - please see the Guidance Note for more information.
    
5. If satisfactory evidence of identity is not obtained at the outset then the business relationship or one off transaction(s) cannot proceed any further.

7. Record Keeping Procedures

1. Where the 'relevant business' is carried out then the client identification evidence and details of the relevant transaction(s) for that client must be retained for at least five years.

8. Guidance & Training

1. In support of this procedure, the Council will make all staff aware  of the requirements and obligations placed on the Council and on themselves as individuals by the Anti Money Laundering legislation.