MONEY LAUNDERING POLICY OF JAMES DICKINSON & CO - …



This is a sample document only which has been produced for the New Zealand Law Society to assist lawyers with Anti- Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT) compliance requirements. It is intended as a guide only and should be adapted to take into account a law firm’s particular circumstances including internal policies and procedures specific to the law firm. This sample document should not be relied on as definitive statement of AML/CFT legal requirements.  Law firms and lawyers must familiarise themselves with the relevant legal requirements and there is information available on the DIA’s website () and the Law Society’s website () about this. If legal advice is required, it should be sought on a formal, professional basis.

 

ANTI-MONEY LAUNDERING POLICIES OF [NAME OF LAW FIRM]

A. Introduction

1. [INSERT DETAILS OF FIRM].

2. [INSERT DETAILS OF PARTNERS AND STAFF MEMBERS OF FIRM].

3. The firm has adapted money-laundering policies and procedures appropriate to its size and risk profile.

4. The firm has adopted a General Policy Statement as well as the specific anti-money laundering policies and procedures mentioned below. A copy of that Statement is attached to this document.

B. Services provided by the firm

The firm provides services in the following areas:

• [INSERT DETAILS OF PRACTICE AREAS].

C. Current Policies and Procedures

Corporate Governance

1. In order to prevent money laundering and terrorist financing the firm is under a legal obligation to have procedures and systems in place to manage the risks associated with becoming involved with such activities. This requires:

• staff being responsible for the prevention and detection of money laundering and the financing of terrorism;

• the implementation of risk management control systems and training; and

• the appointment of an officer with responsibility for such matters.

2. Responsibility falls on the partners of the firm to: -

• consider the money laundering and terrorist financing risks;

• ensure that the systems that are in place are as effective as they can be to manage those risks;

• ensure that all staff (including staff dealing with accounting issues) have an appropriate understanding of the applicable regulatory regime; and

[INSERT NAME] assumes the functions of the Money Laundering Compliance Officer (‘MLCO’) and [INSERT NAME] the function, in [INSERT NAME] absence, of Deputy Money Laundering Compliance Officer.

[INSERT NAME] assumes the function of the Money Laundering Reporting Officer (‘MLRO’).[1]

Risk Assessment

3. The firm recognises that it is under a continuing obligation to assess the money laundering and terrorist financing risks associated with the business and its client base. To discharge that obligation, the firm conducts and documents, in a manual, a business risk assessment. [INSERT DETAILS OF WHERE STAFF CAN FIND BUSINESS RISK ASSESSMENT]. This will be maintained and updated, as required and business risk will be kept under annual review. [INDIVIDUAL FIRM TO TAILOR TO THEIR NEEDS: Annual review meetings will be attended by all members of staff of the firm, until such time as the number of staff makes that inappropriate when relevant members will attend. It is the intention of the firm that [INSERT NAME OF INDEPENDENT ATTENDEE], will attend these meetings annually in order to ensure that there is independent participation in the assessment.]

4. One of the aims of the meetings will be to provide a forum for feedback on the effectiveness of the firm’s AML/CFT policies and procedures and an opportunity for constructive and critical comment – although such comments can be made by any partner or member of staff at any time. The policies and procedures are to be overseen by [INSERT NAME] in her/his capacity as the MLCO, and checked by the partners of the firm.

5. The systems that have been put in place involve the following: -

• Client due diligence (‘CDD’) procedures, including:

i) the development and implementation of client acceptance policies and procedures; and

ii) the identification and verification of the identity of an applicant for the firm’s services.

• Reporting to the Financial Intelligence Unit (‘FIU’) where it knows or suspects or has reasonable grounds to suspect that money laundering or terrorist financing is taking place or attempts to implement such transactions are taking place;

• Screening employees and consultants when they are recruited and where they change role;

• Educating employees and consultants, with the aim being to ensure that they are aware of the risks of becoming involved in such transactions and are aware of their obligations and of the internal policies and procedures;

• The keeping of proper records; and

• Appropriate liaison with the Department of Internal Affairs (‘DIA’) and the FIU.

The systems that have been put in place are applied to all work undertaken by the firm.

6. The following will ultimately be decisions for/matters handled by [INSERT NAME OF MLCO] or, in her/his absence from the office, [INSERT NAME OF DEPUTY MLCO]: -

• Approval of all CDD and client acceptance in respect of certain categories of client;

• Restriction of work where CDD obligations have not been discharged;

• Accepting payments from or making payments to third parties; and

The following will ultimately be decisions for/matters handled by [INSERT NAME OF MLRO]: -

• The recording of situations of concern coming to her/his attention and decisions about how they are to be handled. (If required [INSERT NAME] will seek independent advice or assistance in relation to areas of doubt, noting that in so doing she/he in no way delegating his responsibilities.) [INSERT NAME] will keep a log of situations of concern, suspicious activity reports (both internal and external) and all enquiries made by law enforcement authorities.

[INSERT NAME OF MLCO] and [INSERT NAME OF MLRO] will report to the other partners of the firm twice annually at partners’ meetings.

7. The ultimate objective of the policies and procedures that are in place is to ensure that the following aims are met: -

a) That there is a culture of openness in relation to all aspects relating to AML/CFT procedures.

b) That any concern is raised, considered and dealt with, to the extent possible, within 48 hours.

c) That the procedures that have been put in place are observed and complied with.

8. The firm has adopted a number of systematic approaches to minimise risk and note the outcome of consideration of risk.

9. In particular, the firm adopts the following approach in relation to the handling of payments received by it: -

a) There is an almost absolute prohibition on the handling of cash payments.

b) Care is taken when accepting funds in the client account, whether the money is on account of fees or for a transaction or settlement of litigation. Enquiries will be made as to the source of funds before they are accepted, in other words a risk assessment will be undertaken. If the matter has been assessed as high risk or where the funds are to assist in completion of any transaction the MLCO should be consulted before the money is received. If the matter has been assessed as high risk the firm’s bank will need to be informed.

c) A risk based approach will be utilised in monitoring the source of funds that are used to satisfy invoices issued by the firm.

10. The firm takes particular account to the following factors when assessing risk:

a) The nature, size and complexity of the firm’s business;

b) The products and services that the firm offers;

c) The way the firm delivers its products and services;

d) The types of customers the firm deals with;

e) The countries the firm deals with; and

f) The institutions the firm deals with.

11. The firm’s Risk Assessment will draw attention to these factors, among others, and to warning signs which may heighten a client’s risk profile or give cause for concern (for example, secretive clients, unusual instructions or retainers or instructions that change unexpectedly, especially if there is no rational reason for the change).

Client due diligence requirements

12. The firm has adopted CDD procedures to achieve the following objectives:-

a) Identifying the applicant for the firm’s services and verifying the applicant’s identity, using reliable and independent source documents, data and information to do so;

b) Where the applicant is not an individual, the beneficial ownership and control of the applicant and taking reasonable measures to verify the identity of the beneficial owner(s) and controller(s) of the applicant, so that the firm knows who the owner(s) and controller(s) are;

c) Obtaining information about the nature and purpose of the client relationship;

d) In the event that client funds are to be held, taking reasonable measures to verify the source of those funds and in the event of apparent higher risk, the client’s source of wealth; and

e) Keeping the information up to date, and monitoring activity and transactions undertaken throughout the course of a client relationship to ensure that the activity or transaction being conducted is consistent with the firm’s knowledge of the client.

13. The firm’s approach to client take on procedures (and the collection of CDD information) is described in detail in the document which is [INSERT DETAILS OF WHERE DOCUMENT CAN BE FOUND].

Identification and Verification of Identity

14. The firm has in place procedures for identifying and verifying the identity of applicants or clients:

• At the outset of a client relationship;

• Before carrying out an ‘occasional transaction or activity’ (as defined in AML/CFT Act 2009);

• Where there has been a change in (i) identification information relating to a client; or (ii) the beneficial ownership and control of a client; or (iii) the third parties (or the beneficial ownership or control of third parties) on whose behalf an applicant or client acts; or

• Where any member of the firm has knowledge or suspicion of money-laundering or some doubt as to the veracity of evidence of identity that is already held.

15. The firm has prepared detailed guidelines which set out the identification information and documents required by reference to (i) the status of the applicant and (ii) the risk category (i.e. whether standard or higher risk). These guidelines can be found [INSERT DETAILS OF WHERE THIS CAN BE FOUND].

Ongoing monitoring

16. The firm recognises its obligations to monitor client relationships and have in place procedures to identify and scrutinise complex, unusual or higher risk activity or transactions that may indicate money laundering or terrorist financing activity, especially where there is no apparent economic or visible lawful purpose.

17. The firm’s monitoring system will include a review of live client relationships on a periodic basis (dependent on risk), generally high risk client relationships and all ongoing client relationships (continuing advice / general advice files) will be reviewed annually. Where appropriate (with due regard to tipping off issues), enquiries will be made to determine whether there is a rational explanation for an activity or transaction which may be connected with money laundering or terrorist financing.

18. The firm pays particular attention to the general warning signs identified in the firms risk assessment.

Reporting Money Laundering and Terrorist Financing Activity and Transactions

19. The firm has adopted a Money Laundering Reporting Procedure [INSERT DETAILS OF WHERE THIS CAN BE FOUND]. The staff of the firm are all alert to the possibility that the firm’s services could be used for money laundering purposes or that, in the course of their work, they could become aware of criminal or terrorist property. Staff of the firm are required to report any knowledge or suspicion of money laundering or terrorist financing to [INSERT NAME OF MLRO] immediately.

20. [INSERT NAME OF MLRO] is fully aware of the circumstances under which she/he is required as MLRO to make an external SAR to the FIU and the information which the SAR must contain. In accordance with the reporting procedure, the firm will keep records of any internal reports made by staff and of any suspicions. The staff of the firm recognise that the requirement to report knowledge or suspicion of money-laundering does not apply in certain cases of legal professional privilege. All decisions on the applicability of such privilege will be taken by [INSERT NAME OF MLRO] who has considered any applicable guidance which has been given by the DIA.

Screening, awareness raising and training

21. The partners of the firm have developed and discussed with existing staff the firm’s identification, record keeping and internal reporting procedures and the firm’s anti-money laundering policies. [INSERT NAME OF MLCO] and [INSERT NAME OF MLRO] are to ensure that staff are aware of their obligations under the relevant enactments and of the guidlines prepared by the DIA. Copies of the DIA’s Guidelines for the Legal Sector are available on the JFSC’s website.

22. [INSERT NAME OF MLCO] will need to ensure that the firm is aware of all relevant developments and its policies and procedures remain current. The firm will provide induction training within 10 working days of either the start of employment or a change of role, and will ensure that all employees receive training once every two years. Measures will be taken to raise staff awareness of policies and procedures and the context for them on an ad hoc basis but at least twice yearly.

23. The firm will adopt screening procedures for future employees that require:-

• Obtaining and confirming written references;

• Obtaining and confirming employment history and qualifications disclosed;

• Requesting information on whether or not any regulatory action has been taken against the individual and, if so, obtaining details; and

• Requesting information on whether or not the individual has any criminal convictions and obtaining details.

Record keeping

24. The firm has adopted procedures to ensure that records are kept of enquiries made and information obtained while exercising client due diligence for AML/CFT purposes and to ensure that these records are retained as required for legal and regulatory purposes. Records are kept by way of original documents, photocopies (certified where appropriate), in scanned form or in computerised or electronic form.

25. Records are kept for a minimum of five years from the date that a client relationship ends or, in the case of a one-off transaction, for five years from the date that the transaction was completed. However, in the case of clients who have been subject to a SAR (whether internal or external), relevant records will be retained separately from the firm’s routine archives and not destroyed, even after the five-year period has elapsed, without confirmation from [INSERT NAME] as MLRO that there are no longer required as part of an enquiry.

26. [INSERT NAME] as MLCO is responsible for ensuring that all records are kept in the appropriate places and are maintained in a consistent manner so that they are readily accessible by and comprehensible to all authorised persons. She/He is also responsible for ensuring that, if information requested for AML/CFT purposes has not been forthcoming or explanations provided have not been satisfactory, a full record is kept.

27. Finally, it is noted that the firm understands its obligation to keep adequate and orderly records as follows:

• records of clients and transactions for a minimum of five years from the date that a client relationship ends or, in the case of a one-off transaction, for five years from the date that the transaction was completed

• records of findings of its examinations of notable transactions and transactions with a connection to a high-risk state for five years from the end of the calendar year in which the examination is undertaken

• its business risk assessment and records of its systems and controls (including policies and procedures) for at least five years after the end of the calendar year in which they are superseded

• senior management’s assessment of the effectiveness of, and compliance with, systems and controls (including policies and procedures), including reports presented by the MLCO on compliance matters and MLRO on reporting for five years after the end of the calendar year in which a matter is considered

• a record of what barriers (including cultural barriers) exist to prevent the operation of effective systems and controls (including policies and procedures) for five years after the end of the calendar year in which a matter is considered

• records to demonstrate experience and skills, independence, access to resources, and technical awareness of the MLCO and MLRO for five years after the end of the calendar year in which a person ceases to be a MLCO or MLRO (or deputy MLRO)

• training provided on the prevention and detection of money laundering and the financing of terrorism for five years after the end of the calendar year in which training was provided.

28. The Firm will periodically test access to records.

Audit of process effectiveness

29. The MLCO in conjunction with the partners will investigate and review the effectiveness of the firm’s systems and controls at least annually. This will include reviewing the number and nature of high risk relationships, relationships declined or terminated because of a CDD issues, the number and nature of relationships where delayed verification was permitted, any breaches of policies and procedures and the results of tests of the underlying records of obliged persons.

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[1] The MLCO does not need to be a Partner of the firm (it can be any suitable employee). However, it may be desirable that the MLRO is a Senior Partner (or Senior Lawyer) given the MLRO’s primary role concerns reporting to the FIU. The MLRO will therefore need an in-depth knowledge of AML/CFT, legal professional privilege and related issues. However, in some firms (particularly smaller firms), it may be that the MLCO and MLRO can be the same person. Such person will be responsible for administering and maintaining the AML/CFT compliance programme as well as reporting to the FIU.

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