Scope

This policy has been designed to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, all related prevailing amendment regulations, and further regulatory requirements such as the Proceeds of Crime Act 2002 (“POCA”)

The firm is required to comply with the Money Laundering Regulations and all subsequent amendments (“MLR”).  The five key obligations include:

• Providing staff training;
• Customer due diligence, including knowing the customer/business (including ID);
• Record keeping;
• Having systems and controls in place to prevent money laundering/terrorist financing, including the internal reporting of suspicions or knowledge of money laundering;
• Identifying a “Nominated Officer”, to oversee the submitting of Suspicious Activities Reports (“SAR”) to the National Crime Agency (“NCA”) and the implementation of the MLRs and appropriate guidance.

Policy Aim

It is the aim of this policy to align the firm’s internal controls with the requirements of current Money Laundering Regulations and to put in place appropriate systems and controls to forestall money laundering and terrorist financing. The policy aims to drive the development of internal controls alongside relevant time sensitive monitoring and reporting.

The anti-money laundering and counter-terrorist financing (“CTF”) regime is designed to prevent our services being used by criminals. We are obligated to spot and report money laundering and terrorist financing. Failure to meet these obligations can lead to criminal penalties, substantial fines and untold damage to City Energy Network’s reputation.

Responsibility

1. Overall responsibility for the policy lies with the Senior Management Team (“SMT”) alongside the Directors.
2. The SMT and the Directors are responsible for assigning the review of legislative and regulatory requirements as appropriate whereby the evaluation of compliance will also be driven by changes to underlying legislation.
3. The firm has a Bribery Policy (“POL009”) which seeks to ensure good conduct from all of its employees in all matters relevant to Anti-Corruption and Anti-Bribery. This policy should be read in conjunction with POL009 – Bribery Policy.

Money Laundering Reporting Officer (“MLRO”)

The Money Laundering Regulations require that City Energy Network appoints a Nominated Officer to ensure that there is up-to-date knowledge of issues relating to Anti-Money Laundering and Counter-Terrorist Financing throughout the organisation, implement appropriate policies and procedures and receive reports of suspicious activity.

The Firm has appointed Director and member of the Board, Michelle Roberts, to this position. Michelle Roberts is the Approved Person for Controlled Function CF11.

The MLRO is responsible for making Suspicious Activity Reports in line with the requirements of POCA to the NCA in the event that staff, approved contractors or any other third party working for the firm know or suspect a crime may have been committed whilst working with and for City Energy Network.

Staff and partners of the firm familiarise themselves with the various money laundering offences detailed in POCA.  An overview of these offences is provided below and individuals should take time to familiarise themselves with these offences.  If any member of staff or partner of the firm requires further anti-money laundering training they should notify the MLRO for appropriate action to be taken.

In order to report any suspicious activity the MLRO will report online.  

Reporting Suspicious Activity

Any activity outside the normal or expected activity should be considered unusual and must be investigated. Understanding the business or customer profile is crucial. Unusual activity or transactions outside the established profile should be considered as a potential indicator of suspicious activity. Investigations should establish the reasons for the unusual activity or transaction. This may either remove or confirm your suspicion. If it is confirmed, you must report it to the MLRO. Failure to do so is an offence that could result in five years imprisonment.

Where employees / workers / contractors suspect or know that a crime may or has been committed, they should complete an Internal Suspicious Activity Report form (DOC020) and pass it to the MLRO without discussing their knowledge or suspicious with anyone.  

If the MLRO gives you consent to proceed with a transaction, then that consent only applies to that specific transaction. If the client requests further activities or transactions, further consent is required from the MLRO even if you do not have a suspicion.

The MRLO will submit a SAR via the SAR Online System at http://www.nationalcrimeagency.gov.uk/about-us/what-we-do/specialist-capabilities/ukfiu/how-to-report-sars  

An instant acknowledgement through the online system ensures the Firm’s evidenced compliance with its Anti-Money Laundering obligation.

If no response has been received seven working days after the SAR was submitted, then the transaction can proceed. It may be a tipping off offence to reveal to the customer that a SAR has been submitted. A SAR should be submitted within 48 hours of a suspicion being formed.

Information that a SAR has been made should never be placed on a customer record.

In the event of electronic systems failure, the Firm will report manually by using the documents made available by the National Crime Agency on www.nationalcrimeagency.gov.uk.

Implications of Data Subject Access Requests

The Data Protection Act 2018 (“DPA18”) and the General Data Protection Regulations (“GDPR”) allow a data subject (i.e. a customer or employee in respect of whom the Firm holds personal data) to request that a data controller (i.e. the Firm) provides details of personal information held subject to DPA18 and GDPR.

It is the responsibility of the MRLO to take care when honouring such a request since the offence of “tipping off” may be committed if the data subject is alerted to either an internal report being made to the MLRO making a SAR to the NCA.  Such information may be withheld under the Data Subject Access Request.

What is Money Laundering and Terrorist Financing

Money laundering is the process through which proceeds of crime and their true origin and ownership are changed so that the proceeds appear legitimate. Terrorist financing is providing or collecting funds, from legitimate or illegitimate sources, to be used to carry out an act of terrorism.

How does money get laundered?

Typically money laundering involves three stages:

Placement:
The process of placing criminal property into the financial system. This might be done by breaking up large sums of cash into smaller amounts or by using a series of financial instruments (such as cheques or money orders) which are deposited at different locations.

Layering:
The process of moving money that has been placed in the financial system in order to obscure its criminal origin. This is usually achieved through multiple complex transactions often involving complicated offshore company structures and trusts.

Integration:
Once the origin of the money is disguised it ultimately must reappear in the financial system as legitimate funds. This process involves investing the money in legitimate businesses and other investments such as property purchases or setting up trusts.

We are most likely to become involved in the placement stage but potentially could be involved in any stage.

How do I know if my matter involves money laundering or terrorist financing?

You do not have to behave like a police officer but you do have to remain alert to the warning signs of money laundering and terrorist financing and make the sort of enquiries that a reasonable person (with the same qualifications, knowledge and experience as you) would make.

The list below is non-exhaustive. Typical signs of money laundering and terrorist financing are:  

• Obstructive or secretive customers
• Instructions outside our usual range of expertise, i.e. Why is the customer using us?
• Customers based a long way from us with no apparent reason for using us
• Cases or instructions that change unexpectedly or for no logical reason, especially where:
  • The customer has deposited funds with us
  • The source of funds changes at the last moment
  • You are asked to return funds or send funds to a third party
  • Loss-making transactions where the loss is avoidable
  • Complex or unusually large transactions
  • Transactions with no apparent logical, economic or legal purpose
  • Large amounts of cash being used
  • Money transfers where there is a variation between the account holder and signatory
  • Payments to or from third parties where there is no logical connection to the customer

Money Laundering Evidentiary Requirements

Information came to a person in the course of business and not in their personal life.

The information was information which the employee knew, suspected or caused the employee to have reasonable grounds for suspecting that another person is engaged in money laundering.

The information must be brought to the attention of the MRLO immediately without discussing it with anyone.

The MRLO will decide whether or not to submit a SAR to the NCA. The decision will not be discussed with the person reporting the activity.

Money Laundering Offences

The Proceeds of Crime Act 2002 (“POCA”) establishes a number of money laundering offences.

• The principal offences
  • Conceal, disguise, convert, transfer or remove criminal property from the UK (s327)
  • Enter into or become concerned in an arrangement which facilitates the acquisition, retention, use or control of criminal property for or on behalf of another (s328), or
  • Acquire, use or have possession of criminal property (s 329)

You must know or suspect that the criminal property represents a benefit from criminal conduct.

• Failure to disclose offences
  • Making an SAR to the Nominated Officer can be a defence to a principal money laundering offence.
  • Failing to make a SAR to the Nominated Officer where you know or suspect money laundering is an offence in itself which is punishable by up to five years’ imprisonment, a fine or both.
• The offences of tipping-off and prejudicing an investigation
  • You will commit the tipping-off offence if you disclose to the person to whom the disclosure relates that you, or anyone else:
    • Has made an SAR to the Nominated Officer (or NCA)
    • Of information which came to you in the course of business

That disclosure is likely to prejudice any investigation that might be conducted following the SAR

• You will commit the prejudicing an investigation offence if you disclose that an investigation is being contemplated or carried out and that disclosure is likely to prejudice that investigation. Further, you will commit an offence if you know or suspect that an investigation is being or is about to be conducted and you interfere with documents which are relevant to the investigation. Tipping-off can only be committed after an SAR (including an internal SAR) has been made. You will not commit tipping-off by discussing your concerns with or submitting a SAR to the MLRO.

All money laundering offences relate to criminal property, which is property that constitutes or represents a person’s benefit:

• In whole or in part
• From criminal conduct
• Whether directly or indirectly

This definition covers the proceeds of all crimes. There is no minimum limit on what is considered to be criminal property. Criminal conduct is all conduct that constitutes an offence in any part of the UK or overseas.

A person convicted of any of the above offences listed above is liable to imprisonment for 14 years, a fine or both.

Terrorist Financing Offences

Terrorists need funds to plan and carry out attacks. The Terrorism Act 2000 (TA 2000) criminalises both participation in terrorist activities and terrorist financing.

In general terms, terrorist financing is:

• The provision or collection of funds
• From legitimate or illegitimate sources
• With the intention or in the knowledge
• That they should be used in order to carry out any act of terrorism
• Whether or not those funds are in fact used for that purpose

The TA 2000 establishes a similar pattern of offences to those contained in POCA 2002, i.e:

• Principal terrorism offences of:
• Fundraising
• Use or possession
• Arrangements
• Money laundering
• Failure to disclose offences
• Tipping-off offences

All offences carry heavy criminal penalties. While the terrorist financing and money laundering regimes are different, they share similar aims and structures and run together in UK legislation. Many of the provisions of POCA 2002 and TA 2000 mirror one another and the definitions are deliberately matched.

Both POCA 2002 and TA 2000 run parallel to the Money Laundering Regulations.

Tipping Off

In most jurisdictions it is an offence for someone to tip off (inform) a person suspected of money laundering that a Suspicious Activity Report has been made or there is a money laundering investigation taking place. There are a number of defences and exceptions that apply, but in general a tipping off offence would occur when the action is likely to prejudice an investigation that’s taking place.

A tipping off offence cannot be committed if a report has not been submitted and you liaise with clients or colleagues as part of your enquiries into an unusual activity. However, you cannot mention the word suspicious.