Anti Money Laundering checks are an important part of the estate administration process. Kings Court Trust’s Anti Money Laundering Reporting Officer (MLRO), Nigel Merchant, explains why we need to carry out these checks and what this means for Executors.
Firstly, what is money laundering?
Money laundering can take many different forms but, put simply, it is a criminal’s attempt to conceal the true origin and ownership of the proceeds of their criminal activities. They disguise money to make it look as if it comes from a legitimate source, so “dirty” funds appear “clean”.
Why do we need to do anti money laundering checks?
Under HMRC guidelines, Kings Court Trust has a duty to comply with anti money laundering regulations, which includes:
- Having anti money laundering procedures in place and provide regular training to staff with regard to anti money laundering legislation
- Identification procedures – unless a client’s identity can be established, we must not continue to act. Our client is known as the beneficial owner.
- Record keeping procedures to ensure that all records are retained for a period of six years from the end of the transaction.
- Internal reporting procedures – these require a business to have a MLRO who is available for staff if they are unhappy with a particular circumstance during the course of the estate administration.
Anti Money Laundering 2007
Our business must have risk-based policies and procedures that satisfy the UK anti money laundering requirements. The 2007 legislation superseded the 2003 procedures and, in addition to making businesses more aware of these requirements, has also placed further emphasis on compliance and record keeping. Much debate continues in the legal world on how these can be applied on a day-to-day basis without inhibiting business as usual. As ever, there are areas of concern which need clarification so practices do not unwittingly commit offences. The penalties can be severe, as a major banking organisation found out earlier in the year.
What do these regulations mean for Executors?
One of the areas currently under review is the confirmation of the client, known as “beneficial ownership”. Due diligence regulations require early confirmation (via passport, driving licence and/or other acceptable documents) of the client. Kings Court has always and will continue to ensure verification of the client at the outset. Sometimes production of these documents can prove difficult. There are secondary forms of identification of the person and their address that can be used, but UK regulations are clear that transactions should not take place before the above has been satisfied. These regulations are there primarily to protect the client but can also be a source of frustration for them. To be clear, there are no short cuts.
Money laundering is unlikely to ever be eradicated. The UK procedures will inevitably continue to change and adapt to try to combat the nature of this crime and businesses will need to demonstrate flexibility to keep pace with the change. These procedures now form part of our everyday lives and clients should have the comfort of the checks taking place rather than view them as a barrier to do business.
Nigel Merchant is the Anti Money Laundering Reporting Officer (MLRO) at Kings Court Trust and can be reached on firstname.lastname@example.org.