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Anti Money Laundering

Money Laundering

“…the process by which the true ownership and proceeds of criminal activity are concealed”

Why do you need to know?

As financial businesses offering savings, loans and banking services; credit unions may be a target for money launderers to commit the crime
It is the responsibility of the Board of Directors to establish the anti-money laundering policy of the credit union.
It is the responsibility of the management, staff and volunteers to implement and carry out the policy established by the board.

Key Points

Money laundering is about concealing, moving or just having the proceeds of criminal activity (“dirty money”). The aim is to prevent this occurring so criminals cannot enjoy the proceeds of crime by confiscating assets and to ensure that crime does not pay.
Money Laundering is undertaken through:
Placement – Illegal money is deposited in the financial system or goods purchased using the money. Large amounts of cash can be broken down into smaller amounts and deposited in many institutions or in a series of transactions with the same institution. This is called ‘Smurfing’ .The use of smurfs means that credit unions may be at risk with the placement of smaller amounts of cash.
Layering – Layering can be the process of creating a complex web of transactions, to obscure the link between the initial deposit and the eventual laundering cycle.
Integration – Integration is where the funds are returned to the legitimate economy for later extraction e.g. by investing in property, cars or legitimate business.
Credit unions must take a Risk Based Approach – this means developing an AML strategy that is suited to size and location of business, volume and type of transactions and membership base

A ‘one size’ does not fit all credit unions

It is important to note that Know Your Customer checks should be based on risk-based approach. There is no fixed prescriptive documentation list, credit unions should tailor based on its own risk profile.

eVisas

An eVisa can be used to prove an individual’s identity, an eVisa is an identification document for the purpose of Section 7 of the Identity Documents Act 2010.

Gov.uk has provided useful guidance regarding KYC on customers providing proof of identity and immigration status:

Residence documents: information for financial providers – GOV.UK

Putting into Practice

To comply with the Money Laundering Regulations 1993 and the regulator’s rules on money laundering, credit unions must:

Appoint a Money Laundering Reporting Officer
Establish a money laundering prevention policy
Establish proceeds and systems of control aimed at preventing money laundering
Train directors, employees, staff and volunteer collectors in preventing money laundering, identification requirements, identifying suspicious transactions, reporting to the MLRO; at least once within a two year period
Report suspicions of money laundering to NCA (previously known as SOCA)

Details of Anti Money Laundering requirements are contained in Joint Money Laundering Steering Group (JMLSG) Industry Guidance. See link to the right.

Suspicious transactions must be reported to the National Crime Agency (NCA) by making a Suspicious Activity Report (SARs). A SARs report can be made electronically through the SAR Online system or by completing forms available to download from the NCA website. See links to the right.

Download a money laundering policy in the ABCUL Members Resource Library here.

Further Guidance

What is an eVisa?

eVisas are now in place, replacing physical documents with a digital record of identity and immigration status.

An eVisa is a digital record of your identity and immigration status, and shows the condition of your status. eVisas are replacing the physical immigration documents. It is digital only and replaces physical documents such as Biometric Residence Permits (BRPs), Biometric Residence Cards (BRCs) and wet ink stamps or vignettes in passports.

Getting an eVisa is free of charge. You will usually get an eVisa when you successfully apply for a visa or other type of permission to be in the UK.

eVisas can be used to confirm

Identity
Right to study
Right to any public services or benefits that one may be entitled to

A UK Visas and Immigration (UKVI) account is needed to access an eVisa.An account will need to be made for each person who has permission to stay in the UK, including children and dependants.

Who can access an eVisa?

If you have permission to be in the UK for more than 6 months, or if you have permission to be in the UK for 6 months or less for some types of work or study visa.

This includes individuals granted leave to remain, such as :

Workers (Skilled Workers, Health and Care Workers, etc.)
Students
Family members of British citizens or settled individuals
Refugees
Individuals with Indefinite Leave to Remain
Selected short-term visa categories

You will need a UK Visas and Immigration (UKVI) account to access your eVisa.

Claiming asylum and acquiring refugee status

The Home Office will create a UK Visas and Immigration account (UKVI) if someone claims asylum and they acquire refugee status. Eligibility for an eVisa is only once refugee status has been granted. A UKVI and ‘eVisa’ will give online evidence of immigration status.

The Home Office will send a UKVI customer number and instructions on how to access the UKVI account and eVisa.

A refugee or someone with a humanitarian protection status who has no physical document, i.e. a physical passport, will need a share code to verify their identity.

A share code will prove immigration status and is useful to prove immigration status to people such as employers or landlords, or when you travel.

An eVisa can then be used to confirm:

Identity
Right to study
Right to any public services or benefits entitled to

Share code for the UKVI account:

In this instance, for refugees or those who have a humanitarian protection status, the most likely process to acquire a share code is through the UKVI customer number that the Home Office has given a refugee/under humanitarian protection.

A share code may need to be given to another organisation such as a bank, building society or credit union, when setting up an account with them.