Anti-money Laundering Impact in the Regulated Sector - November 2015

Weil, Gotshal & Manges

Description

Modern Slavery Act 2015 the requirement to have in place effective systems and controls to prevent the laundering of criminal proceeds. However, despite the existence of sophisticated systems and the understanding within the sector around such requirements, regulators continue to uncover shortcomings and failings in the systems of even the biggest banks. From a compliance perspective, the introduction of the SCTS reporting requirement component of the Act has the potential to further increase the complexity of the screening processes for transactions in the regulated sector. Critically, the introduction of the SCTS will alert businesses in the regulated sector to issues existing across complex and multijurisdictional supply chains. The contents of a SCTS will provide regulated business with considerably more information about the way in which their clients operate than previously required, putting banks ‘on notice’ of potential issues. This new information will be important for compliance officers and regulators in assessing whether there are ‘reasonable grounds to suspect’, and when a suspicious activity report is required. A further important consequence of these developments is that, because the SCTS will be new information, regulated business will be required to reassess the correct riskrating attached to companies that, up to now, would have been regarded as low risk. Key steps for banks and financial institutions to action include: „„ Training staff on Modern Slavery issues „„ Revising Client Due Diligence requirements „„ „„ „„ „„ „„ Revising risk assessments to include Modern Slavery issues Understanding the architecture of criminal organisations involved in Modern Slavery Identifying Modern Slavery ‘red flag’ issues Developing in-house expertise in analysing SCTS reports Ensuring systems are in place to collect and analyse SCTS reports for all affected customers If you have questions concerning the contents of this Alert, or would like more information about The Modern Slavery Act 2015, please speak to your regular contact at Weil, or to: Simon Taylor (London) Bio Page simon.taylor@weil.com +44 20 7903 1141 ©2015 Weil, Gotshal & Manges. All rights reserved. Quotation with attribution is permitted.

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