DHA Respond on Anti-Money Laundering Queries

This published by the Celtic League:

DHA Respond on Anti-Money Laundering Queries

NEWS FROM THE CELTIC LEAGUE

The Department of Home Affairs have responded to queries raised by the Celtic League one month ago about a new Anti Money Laundering ‘Code’. The League had raised issues of ‘clarity’, ‘penalties’ and ‘professional accountability.

In their response the DHO say they consider the concerns raised are adequately covered in the Code saying ‘the Code is not an entirely new document, it is an updating of established versions of the Code set in a clearer format’.

The Leagues letter to the DHA and the Ministers response are set out below;

“The Minister for Home Affairs
Mr Juan Watterson MHK
Holmfield
88 Woodbourne Road
Douglas
Isle of Man
IM2 3AP

08/01/15

Dear Minister,

I write with reference to the recent (Draft) Anti Money Laundering and Countering the Financing of Terrorism Code 2015.

I note within the document the term ‘reasonable measures’ is used on at least sixteen occasions.

I an aware that this ‘jargon’ seems to appear universally in money laundering legislation/codes etc, however to establish that the term has meaningful context it surely needs to be expanded – or have I missed something?

For example in a case where having taken ‘reasonable measures’ is advanced as a defence would it (at trial) be for the prosecution to prove that ‘there were reasonable measures that the accused could have taken, what measures these were and that they were necessary and reasonable’ or will the burden be on the defence to prove that the accused took such measures?

In the final reference to ‘reasonable measures’ (Offence section 3 Page 40) the term ‘it is a defence’ is used. Given that once again the context in which the ‘reasonable measures’ may have been taken is important should this not read ‘it may be a defence’?

In relation to the term ‘customer’ in the Draft Code I am unclear how far the new proposals take us from the requirements which already exist for financial institutions/providers to establish the bona fides of their users. Perhaps the Department could clarify this?

Under Part 10 ‘Offences’ the penalties outlined seem inordinately lenient given the impact that money laundering and financing terrorism causes globally?

Also in Part 10 section (1) it seems a significant omission that a provision to suspend an Advocate, Accountant or Director of a Corporate body from practicing is not specified (albeit that there may be separate disciplinary mechanisms for such individuals which may be used to prevent them practicing).

Yours sincerely

J B Moffatt (Mr)
Director of Information
Celtic League

cc Chief Minister”

“From The Minister for Home Affairs

Dear Mr Moffatt,

Consultation on Draft Anti-Money Laundering and Countering the Financing of Terrorism Code 2015

Thank you for your letter in relation to the consultation about the draft anti-money laundering code.

In respect of the points raised in your letter –

“reasonable measures” is indeed not defined, which means the words take their dictionary meaning. The Guidance issued to the finance industry by the FSC explains that these are appropriate measures that are commensurate with the money laundering or terrorist financing risks. (The international standards concerning money laundering and terrorist financing, the FATF Recommendations, now advocate an effective risk-based approach to compliance rather than a “tick box” approach.)

Where a defence is offered, as in Paragraph 41(3), if the person can show they took all “reasonable measures” it is an absolute defence. It would be for the prosecution to show that the defence was ineffective because the person had not in fact taken all reasonable measures (i.e. that a reasonable person would consider the measures taken to be reasonable in all of the circumstances of the case).

“customer”. As the consultation documents made clear, the Code is not an entirely new document, it is an updating of established versions of the Code set in a clearer format for the industry. Many terms and requirements have therefore remained as before.

In relation to the leniency or otherwise of the penalties for offences specified in Part 10, these are penalties for breaches of the Code. However, the penalties for actual money laundering and related offences are set out in Part 3 of the Proceeds of Crime Act 2008. Under section 150 of POCA a person who is convicted on information of one of the main money laundering offences in sections 139, 140 and 141 of the Act can be sentenced to up to 14 years custody, an unlimited fine, or both. Similar levels of custody and fines may be imposed for terrorist financing offences under the Anti-Terrorism and Crime Act 2003. The Department is satisfied that the penalties set out for the various offences are sufficient.

The Code’s purpose is to secure compliance with anti-money laundering and countering of the financing of terrorism procedures. The Code has no function in determining whether or not a person may practice in their respective profession or business.

Yours sincerely

Hon. Juan Watterson BA (Hons) ACA MHK
Minister for Home Affairs”

The Celtic League are grateful for the detailed response from the Minister.

The Draft Code can be found here – the consultation period is now closed;

http://www.gov.im/ConsultationDetail.gov?id=483

J B Moffatt (Mr)
Director of Information

07/02/15

(Please note that replies to correspondence received by the League and posted on CL News are usually scanned hard copies. Obviously every effort is made to ensure the scanning process is accurate but sometimes errors do occur.)

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