• Charitable and Non-Profit Organisations

    Some services provided by Charitable and Non-Profit Organisations are attractive to criminals wanting to launder the proceeds of crime and to finance terrorism.

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Charitable and Non-Profit Organisations

Some services provided by XXX are attractive to criminals wanting to launder the proceeds of crime and to finance terrorism.

There are some instances of legal professionals being directly involved in money laundering, however most lawyers who are exposed to it are not complicit.

The services offered by legal professionals that are vulnerable to money laundering activities relate to their involvement in financial transactions, such as money transfers, conveyancing, as well as, the establishment of legal entities to hold assets.

The drivers for bringing the XXX into the AML/CFT regime are to:

  • Reduce the risk of businesses being unwittingly drawn into criminal activity
  • Improve the ability to detect and investigate serious crimes such as drug offending and tax evasion, by following the money trail that such offences generate
  • Help stop the ‘displacement effect’ where criminals move their funds to sectors outside of regulated sectors in a bid to avoid detection.

Some countries have already adopted AML/CFT laws, whilst others are in the process of implementing, measures to prevent the misuse of non-financial businesses and professions, including the legal profession.

The AML/CFT regime is risk based, which means that your responses to the AML/CFT obligations placed upon you should be risk-based.  A risk-based AML/CFT regime requires that you understand and address the Money Laundering and Financing Terrorism (ML/FT) risks associated with legal services you offer and design, implement and maintain systems, procedures and controls that are proportionate to these risks.

What are the ML/FT Risks?

The Money Laundering and Financing Terrorism (ML/FT) risks associated with legal services include:

  • Criminals may exploit lawyers as gatekeepers because this can give the impression of respectability and legitimacy, especially in relation to large financial transactions
  • Criminals may make a deposit or international wire transfer to a lawyer’s trust account to send money anonymously
  • Criminals may exploit lawyers’ conveyancing services when buying or selling property to make their transactions appear legitimate
  • Criminals may seek a lawyers’ assistance to establish companies or trusts, which they then use to obscure who owns or controls the funds and assets (that is, the beneficial owner)
  • Criminals may seek to use lawyers to conduct multiple transactions that disguise the origin of different sources of funds, which hinders detection and investigation.

The legal profession, in developing responses to obligations under AML/CFT laws and regulations, must consider the ML/FT risk it faces and ensuring the organisation conducts a comprehensive ML/FT risk assessment to identify, assess, mitigate and manage ML/FT risk exposures is a critical first step in complying with AML/CFT laws.

What type of AML/CFT Program Manual do you need?

Whilst relationship based, the nature of the legal professions activities covered by the AML/CFT law is transactional.

The AML/CFT Program Manual and the controls within it needed by a lawyer or law firm should reflect the transactional nature of the business and be proportionate to the ML/TF risk faced.

The key controls for the legal profession include:

  • ML/FT Risk Awareness Training
  • Customer Due Diligence
  • Customer Name Screening
  • Suspicious Activity/Matter Reporting
  • Record Keeping

To be appropriate, the controls you put in place should be commensurate with the size, nature and complexity of your business and the customers you service.

What are the potential consequences of non-compliance?

Regulated entities that fail to comply with AML/CFT obligations expose themselves to a number of risks including:

  • Enforceable undertakings and/or fines imposed by regulators
  • Personal accountability for Board members, Senior Executives and other key functions
  • Reputation damage and loss of trust from shareholders, customers, employees, business associates and the general public
  • Loss of license to operate the business
  • Significant falls in the share price
  • Adverse media attention across social and mainstream media
  • Increased costs to conduct remediation activities
  • Enforced audit and continual reporting of ongoing progress to regulators
  • Management attention diverted away from running the business.

How can we help you?

AML Accelerate, drawing on unparalleled expertise and real world experience, has developed a AML/CFT Program Manual for the legal profession that you can tailor to your specific needs, ensuring your AML/CFT controls are commensurate with your business and where possible leverage your existing business processes.

Our AML/CFT Program Manual includes:

  • Comprehensive information about your business that will contextualise the ML/FT risk profile
  • A ML/FT risk assessment that allows you to identify, assess, mitigate and manage the real ML/TF risks faced by your business
  • An AML Program of controls that addresses your legal and regulatory obligations
  • Customer due diligence standards that align local know your customer requirements and international best practice
  • An AML Operating Manual that will ensure you implement the AML controls within your organisation
  • A country risk assessment, providing an ML/FT assessment of over 200+ countries
  • A glossary of key terms and definitions, as well as, a comprehensive suite of reference materials

The AML Accelerate will also ensure that you can maintain your program whenever the AML/CFT laws and regulations inevitably change or your business change, so you can be confident of continued compliance and avoid the potential consequences of non-compliance.

What are the core AML Program obligations?

Regulated entities are typically required to do the following to comply:

  • Conduct a Money Laundering and Terrorism Financing Risk Assessment
  • Develop an AML Program that is proportionate to ML/FT Risks
  • Establish a Customer Due Diligence (CDD) Program including PEP screening; collection and verification of know your customer (KYC) information with Enhanced and Ongoing CDD controls
  • Implement an ML/FT Risk Awareness Training Program
  • Establish Pre and Post Employment Screening
  • Appoint an AML Compliance Officer
  • Establish effective Board and Senior Management oversight of the AML/CFT Program
  • Establish Record-keeping controls.

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