Allerd

ale Borough Council

Anti Money Laundering Policy
August 2011
Allerdale Borough Council will take measures to prevent the Council and its
officers being exposed to money laundering, to identify areas in which money
laundering may occur and to comply with legal and regulatory requirements,
especially the process for reporting actual or suspected money laundering
cases to the Councils Money Laundering Reporting Officer (Monitoring
Officer). It is the responsibility of every officer to be vigilant and act promptly in
all suspected cases.
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Introduction

1.1 The Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Money
Laundering Regulations 2007 place obligations on the council and its
employees with respect to suspected money laundering, the key points
being:

The reporting and detection of suspected money laundering.

Officers must be vigilant for the signs of money laundering.
Any employee who suspects money laundering activity must report this
promptly to the councils Money Laundering Reporting Officer (see
reporting form for completion by the officer suspicious of activity).
No payment to the council will be accepted in cash if it exceeds 2000.
Where the council is carrying out certain regulated activities during day
to day business then the customer due diligence procedure must be
followed, for example some Treasury Management activities are
regulated by the Financial Services Authority.
The Money Laundering Regulations are complex and detailed and
should there be any doubt about the policy requirements, please
request further information from line management.

The Policy

2.1 The policy applies to all officers and members, and sets out procedures for
the reporting of suspected money laundering activities with the aim to
reduce potential criminal activity. The policy defines procedures that will
assist the council to comply with its legal obligations.
2.2 The Policy should be read along side the councils Whistleblowing Policy,
Anti-Fraud and Corruption Policy and the Treasury Management Practice
money laundering guidelines.
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2.3 Failure of an officer to comply with the procedures defined within this
policy may lead to disciplinary action in line with the councils Disciplinary
Policy Procedures.
2.4 Failure of a member to comply with the procedures defined within this
policy would be reported to the leader for further action, for example a
possible report to the Standards Committee.
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What is Money Laundering?

3.1 Money laundering is a term used which relates to offences involving the
proceeds of crime or terrorism funds. The following acts are defined as
acts of money laundering:

Concealing, disguising, converting, transferring criminal property or

removing from the UK (section 327 of the Proceeds of Crime Act
(POCA) 2002).
To enter into or become concerned in an arrangement which you know
or suspect will assist the acquisition, retention, use or control of
criminal property or on behalf of another person(POCA section 328).
Acquiring, using or possessing criminal property.

These are primary money laundering acts, two secondary offences are
also defined which relate to the failure to disclose any of the three primary
acts and tipping off (POCA section 330). Tipping off is where someone
informs a person or persons involved in, or suspected to be involved in
money laundering acts, in such a way as to reduce the likelihood of their
being investigated.
3.2 While the risk to the council of breaching legislation is considered to be
low, officers in all areas should be aware that they could be potentially
exposed to money laundering acts. It is important that all employees are
aware of their responsibility to report any suspicions of money laundering
activity as detailed within this policy (see reporting). All officers are
responsible to act promptly and report any suspicions to the Money
Laundering Reporting Officer to prevent any breach of legislation which
can lead to serious criminal penalties.
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The Money Laundering Reporting Officer (Monitoring Officer)

4.1 The officer nominated to receive disclosures about money laundering

activity is the Monitoring Officer. The Money Laundering Reporting Officer
will deal will all disclosures confidentially and make decisions on reporting
the activity to the Serious and Organised Crime Agency (SOCA) in the
appropriate manner, all reports will be retained for five years. Contact
details:
Sharon Owen
sharon.owen@allerdale.gov.uk
01900 702703
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Reporting

5.1 Any employee who suspects money laundering activity should report their
suspicions promptly to the Money Laundering Reporting Officer using the
form attached (see reporting form for completion by the Money Laundering
Reporting Officer, referenced AML Form 1), upon receipt of the report the
Money Laundering Reporting Officer may contact you directly to discuss
the content of the report as required.
5.2 No further enquiries should be made about the suspected money
laundering after reporting to the Money Laundering Reporting Officer for
action. No further steps in any transaction relating to the suspected money
laundering should be made without authorisation from the Money
Laundering Reporting Officer. For example, if repeated reported cash
overpayments are received to a specific account seek guidance from the
Money Laundering Reporting Officer before the amounts are refunded as
an Allerdale Borough Council cheque.
5.3 No disclosure should be made to others that would indicate suspicions of
money laundering. Any officer reporting should not discuss the matter with
others or note on file that a report has been made to the Money
Laundering Reporting Officer as this may result in the suspect becoming
aware of the situation.
5.4 The Money Laundering Reporting Officer will promptly evaluate any
Disclosure Report to determine whether it should be reported to SOCA.
5.5 The Money Laundering Reporting Officer will, if necessary, promptly report
the matter to SOCA on the standard electronic report form in the
prescribed manner via www.soca.gov.uk.
5.6 Failure to report a disclosure to SOCA is considered a criminal offence
without reasonable grounds. All disclosures will be retained on file for five
years.
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Customer Due Diligence

6.1 Extra care needs to be taken when the council is carrying out regulated
activities, this is known as customer due diligence, for example treasury
management activities, charging for a service as a business or a customer
other than a UK public authority. Due to the nature and stringent
guidelines for regulated business, you will be aware if your duties involve
regulated activities.
6.2 If customer due diligence (CDD) applies, you must seek evidence of
identity, for example:

Check the businesss website to confirm their business address.

Conduct an on-line search via companies house to confirm the nature
of business and identity of any directors.
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Seek evidence from the key contact of their personal identity following
the guidelines for identifying customers (see the councils cashiering
procedure notes section seven for guidance).

6.3 Identification must be retained for five years after the end of the business
relationship.
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Guidance and Training

7.1 The council will make all officers aware of the requirements and
obligations placed on the council and on themselves as individuals by antimoney laundering legislation and give targeted training to those most
likely to encounter money laundering. See Appendix A at the end of this
document.
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Further information

Further information can be obtained from the following sources:

Proceeds of Crime (Anti-Money Laundering) Practical Guidance for

Public Service Organisations CIPFA
www.soca.gov.uk

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AML Form 1
For completion by the Officer suspicious of activity
CONFIDENTIAL

To:

Report to Money Laundering Reporting Officer

money laundering activity
Monitoring Officer - Money Laundering Reporting Officer

From:

__________________________________________
[insert name of employee]

Directorate: __________________________________________
[insert post title and business unit]
Ext/Tel No:

__________________________________________

URGENT

YES/NO

Date by which response needed: ______________

Details of suspected offence:
Names(s) and address(es) of person(s) involved:
[if a company/public body please include details of nature of business]

Nature, value and timing of activity involved:

[Please include full details eg what, when, where, how. Continue on a
separate sheet if necessary]

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Nature of suspicions regarding such activity:

[Please continue on a separate sheet if necessary]

Has any investigation been undertaken (as far as you are aware)?
(Please tick the relevant box)
Yes
No
If yes, please include details below:

Have you discussed your suspicions with anyone else?

(Please tick the relevant box)
Yes
No
If yes, please specify below, explaining why such discussion was
necessary:

Have you consulted any supervisory body guidance re money

laundering? (e.g. the Law Society) [please tick the relevant box]
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Yes

No

If yes, please specify below:

Do you feel you have a reasonable excuse for not disclosing the matter
to SOCA? (e.g. are you a lawyer and wish to claim legal professional
privilege? [Please tick the relevant box]
Yes
No
If yes, please set out full details below:

Signed: _________________________ Dated: _________________

Please do not discuss the content of this report with anyone you believe
to be involved in the suspected money laundering activity described. To
do so may constitute a tipping off offence, which carries a maximum

penalty of five years imprisonment.

For completion by the Money Laundering Reporting Officer (MLRO)

THE FOLLOWING PART OF THIS FORM IS FOR COMPLETION BY THE
MLRO
Date report received:

___________________________

Date receipt of report acknowledged: ___________________________

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CONSIDERATION OF DISCLOSURE:
Action plan:

OUTCOME OF CONSIDERATION OF DISCLOSURE:

Are there reasonable grounds for suspecting money laundering activity?

If there are reasonable grounds for suspicion, will a report be made to

SOCA? [Please tick the relevant box]
Yes
No
If yes, please confirm date of report to SOCA: __________ and complete
the box below:

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Details of liaison with SOCA regarding the report:

Notice period:

_________ to _________

Moratorium Period:

_________ to _________

Is consent required from SOCA to any ongoing or imminent transactions

which would otherwise be prohibited acts? [Please tick the relevant box]
Yes
No
If yes, please confirm full details in the box below:

Date consent received from SOCA:

________________________

Date consent given by you to employee:

________________________

If there are reasonable grounds to suspect money laundering, but you

do not intend to report the matter to SOCA, please set out below the
reason(s) for non-disclosure:
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[Please set out any reasonable excuse for non-disclosure]

Date consent given by you to employee for any prohibited act

transactions to proceed: ______________________________
Other relevant information:

Signed: ____________________

Dated: ___________________

THIS REPORT TO BE RETAINED FOR AT LEAST FIVE YEARS

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Appendix A
All officers should be vigilant to suspicious activity, in particular when handling
cash and other monetary transactions and when procuring works.
The Chartered Institute of Public Finance and Accountancy (CIPFA) have
issued the following examples for situations which may give rise to money
laundering or the suspicion of it:

Those involved in the handling of criminal property look for ways to

secure and safeguard the proceeds of their criminal activities.
Although other ways exist, cash is the mainstay of criminal
transactions, being the most reliable and flexible, and having little or
no audit trail.
Criminals often transport cash out of the UK using couriers, usually
through airports, to pay into banks overseas, to purchase property
abroad, or to pay to their families.
In the UK, the most popular method of laundering money is thought
to be the purchase of property, followed by investment in front
companies (these are companies used as a front or decoy for illegal
activities) or high cash turnover businesses (frequently legitimate
businesses), or funding a lifestyle.
After property, the most significant assets bought by criminals are
jewellery, artwork, antiques, cars and boats.
The investment of cash in financial products with a view to selling
them quickly (if necessary at a loss) is used.
Criminals use trusts to launder money because of their secretive
nature and flexibility, often using front companies to hide identities.
Gambling large amounts of cash at relatively low odds is used, since
winnings are usually received in the form of cheque payments
Criminals use layering to confuse the audit trail this involves
passing transactions through several stages, often eventually banking
the proceeds as business income, and transferring the money
overseas to a country whose regulatory regime is weaker.

Any transaction involving an unusually large amount of cash should cause

questions to be asked about the source. This will particularly be the case
where cash paid exceeds the amount necessary to settle a transaction, and
the person(s) concerned request a non-cash refund of the excess. This will
include double payments.
The reason for the use of trusts or offshore funds for handling the
proceeds or settlement of a transaction should be questioned.
Care should be exercised and further enquiries may be needed where:

a third party intermediary becomes involved in a transaction

the identity of a party is difficult to establish or is undisclosed
a company is used by a third party and the ultimate ownership
is concealed or difficult to establish
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a party is evasive as to the source or destiny of funds.

It should be remembered that the money-laundering regime adopts an

all-crimes approach. Whilst the above examples are largely concerned
with significant transactions which organisations may effect with third
parties, the offences under the Proceeds Of Crime Act (notably sections 327329) may apply to a very wide range of more everyday activities within an
organisation.
For example, being complicit in crimes involving the falsification of claims,
benefiting from non-compliance with the conditions attaching to a grant, or
facilitating employment on which tax is not paid.
How could money laundering occur within Allerdale Borough Council?
Money laundering may occur during day to day business activities within the
council; these are issues all officers should be aware of:
Credit Union

Completing regulated cash transactions, large cash deposit, identity of

customer withdrawing cash, are you satisfied they are the account
holder?
Processing account applications and identifying new customers, accept
only original documents and ensure identification is in line with credit
union guidance.

Treasury Management (refer to Treasury Management Practices nine)

Are business relationships documented for loans and investments?

Are customers identified and information retained for five years after
the transaction?

Reputation

Use local knowledge, Allerdale is a tight knit community and local

knowledge is invaluable, this increased knowledge may increase
suspicions, if in doubt, report it!
Think about the impact on the council if lack of awareness is identified
and inappropriate relationships are formed.

Business rates (NNDR)

Consideration of the following examples of best practice:

Are business directors identified as bona fide?

Is the business legitimate and have we confirmed this?
Is information retained?

Licensing
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Have we identified the customer requesting a licence?

Has the nature of the relationship been clearly defined and is the
application viable and legitimate?

Training

Officers must be vigilant at all times.

If in doubt, report it.
The Money Laundering Policy should be adhered to and further
guidance requested from the Money Laundering Reporting Officer
where needed.
Access further information via the sources in section eight of this
document, for detailed guidance.

Officers visiting businesses and properties

If suspicious activity is suspected during a property visit, officers should

report the matter via the money laundering reporting procedure.

Identification

Only original forms of valid identification and verification should be

accepted in line with the cashiering procedure notes.
Identification should be retained for reference for five years after the
relationship has ended, reference to the transaction to which the
identification relates should also be clearly documented.

Procurement

Are tender documents clear and is it stipulated that employees

performing contract works are legitimate?
Are new suppliers identified as bone fide?

Debtors

Cash overpayments are repeatedly received to a debtor account

without reasonable explanation, and refunds are given in the form of an
Allerdale Borough Council cheque, this may be a means to conceal the
source of money obtained from illegal activities.

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