As a general rule -

Money Service Businesses are viewed as high risk. Money Service Businesses do not do enough SAR. When in doubt - report.

Anyone in the business who feels something is off should report that to the Nominated Officer. I firmly recommend that these internal reports should NOT be called SAR. (I’ll explain later). Staff should be encouraged to report whenever they feel the slightest bit suspicious.

In practical terms - PEP detection needs to be part of your risk-based approach. You might for example ask the question over a certain limit, or if the transaction is unusual in another way.

If your business is presented with a PEP, you must conduct Enhanced Due Diligence. Essentially, you need to satisfy yourself that the person in front of you is not attempting to transact with the proceeds of abuse of a public office.

Customer Due Diligence

This is the grown-up version of Know Your Customer (KYC).

It's not an only-child. there's big sister Enhanced Due Diligence (EDD) and baby brother Simplified Due Diligence (SDD) too. We'll get to them later.

Whether you need a compliance officer, depends on the size and complexity of your business. The compliance officer is responsible for ensuring the business is compliant with the Regulations. This might be an existing officer, taking on more responsibility, or it may be a new position. However - the person should be a director or equivalent or senior manager.

These procedures should not be aspirational - they should be actual. Most sanctions and penalties are levied not because a procedure is wrong, but because a firm does not follow its own procedure, or has no procedure at all.

This post is relevant to money service businesses which supervised for anti money laundering (AML) by His Majesty’s Revenue and Customs (HMRC). So, if you’re a High Value Dealer or a “pure” pawnbroker, this doesn’t apply to you. If you offer foreign currency or money transfer, then it does.

Risk assessment is where it all starts. Everything flows from here. In many ways, it gives YOU the control. There is no “wrong” risk assessment. The important thing is do one, document it and act accordingly.

At first, these responsibilities can appear daunting, but once the initial work is done, it is straightforward to maintain an effective regime. Worried that you haven’t taken responsibility properly? Get in touch. Lime will conduct a review for you, free of charge.

If you are carrying one of the businesses above in the UK, either under your own auspices, or as an agent, then you need to be registered. Unsure? Get in touch. We’ll let you know whether you need to register or whether you need to check that your principal has registered you. (Free of charge.)

It’s an over-simplification, but following The Regulations, is what keeps businesses safe. While they’re far from perfect, following them, and the guidance that accompanies them, constitutes a defence in court. In short, The Regulations are our friend.