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IMS Responds to Government’s Money Laundering Consultation

The IMS Group (IMS), the compliance and regulation consultant, has today responded to the Government’s consultation on reviewing Money Laundering Regulations 2007. The consultation period closes on 30 August 2011.

The Government’s proposals are intended to give businesses greater confidence to focus compliance on their highest risk areas and to discourage the tick-box approach taken by some businesses.

Peter Moore, head of regulation & compliance at IMS, says: “One aspect of the review looks at de-criminalising procedural failings. Currently there are criminal sanctions for those who do not have the appropriate systems and controls to combat money laundering. However, offences have not been widely prosecuted. We believe that the legal and regulatory requirements that empower and encourage firms to achieve a prescribed objective, rather than make them fearful of not doing so, are more likely to succeed. We therefore support proposals to decriminalise certain criminal offences in the Money Laundering Regulations.

“It was a shame to see that the Consultation did not cover staff training. Many firms engage with service providers for anti-money laundering training, with much being a computer-based approach. This periodic anti-money laundering technique can, on occasions, represent tick-box compliance at its worse, making it ineffective. We hope to see this addressed going forward.

“Much has been made in the Consultation of the perceived failure of firms relying on checks performed by other firms. It stresses that these provisions are there to simplify the obligations on the customer and firms party to a transaction. This should be reconciled with the FSA’s approach who, in addition, advocates that firms employ sample testing on other firms. We encourage HM Treasury to engage with the FSA to clarify this point.

“Regulatory responsibility will always fall back to an individual firm, whether or not they have relied on another regulated firm. Therefore, it is in that firm’s interests to perform customer due diligence themselves rather than rely on the assurance of another firm. We believe that a true risk-based approach should allow a firm to determine what risk is faced by reliance on another firm.”

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