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Communication and training requirements

The 2007 Regulations provide that all 'relevant' employees are required to be 'made aware' of law relating to money laundering and terrorist financing, and regularly given training in how to recognise and deal with transactions which may be related to money laundering or terrorist financing.

Who requires training?

When considering which staff may be considered relevant, businesses should consider not only those who have involvement in client work, but also, where appropriate, those who deal with the business finances, those who assist with compliance and those who deal with procuring services on behalf of the business and who manage those services.

Accordingly, it is likely that all client-facing staff will be considered relevant and at least the senior support staff. Businesses may decide to provide comprehensive training to all relevant staff members, or may choose to tailor its provision to match more closely the role of the employees concerned. In particular, MLROs may require supplementary training, and members of senior management may also benefit from a customised approach or some supplementary training.

Training plans

In considering a training plan, businesses need to keep in mind the objectives they are trying to achieve, which is to create an environment effective in preventing money laundering and which thereby helps protect individuals and the business.

A training programme for relevant staff needs to contain content on the law and content which puts this into the context in which the business operates, to enable recognition of suspected money laundering in that context, and which illustrates the 'red flags' which staff should be aware of in conducting business. In addition, businesses may wish to include reference to other elements of law where criminal penalties may be applied and where these relate directly to the work of the individual or business, e.g. a Financial Conduct Authority-approved person might be expected to have a reasonable working knowledge of the parts of FSMA 2000 and the Financial Services Act 2012 relevant to his work. Whilst it is not necessary for relevant personnel to develop specialist knowledge of criminal law in general, they may reasonably be expected to apply the general legal and business knowledge which might normally be held by a person of their role and experience in determining whether to make a report to the MLRO.

Training also needs to cover how to deal with transactions which might be related to money laundering and terrorist financing. This would include training on the businesses' internal consultation and advisory systems (to assist individuals in assessing whether they have a valid suspicion) internal reporting systems and the businesses' expectations for confidentiality and the avoidance of tipping off and alerting a money launderer.

Training methods may be selected to suit the size, complexity and culture of the business, and may be delivered in a variety of ways including face to face, self-study, e-learning and video, or a combination of methods. Businesses should keep records of attendance at, or completion of, training and are recommended to provide for some form of test or other confirmation of understanding of the training.

Providing an anti-money laundering/counter terrorist financing policy manual is useful to raise staff awareness and can be a continual reference source between training sessions.

Businesses need to make arrangements to ensure new staff are trained as soon as possible after they join the business.

Frequency of training

Businesses are required to provide training at regular and appropriate intervals. The exact frequency of training is a matter for each business to consider. It may be influenced by changes in law, regulation or professional guidance, by new case law or national/international findings, or by a change in the profile and perceived risks of the business. Each business should consider the frequency of its training, possibly on an annual basis, and document its assessment as to whether the current training and state of awareness of employees is sufficient, or whether a supplement is needed. It may not be necessary to repeat the whole of a training programme on a regular basis, but it may be possible to provide concise update material which accomplishes the dual role of refreshing or expanding knowledge and generally reminding staff of the importance of effective anti-money laundering work.

Criminal sanctions and defences

Should a business fail to make provision for the training of relevant employees, then under Section 330(7) Proceeds of Crime Act 2002 a member of staff who does not know or suspect someone is engaged in money laundering gains a defence against the failure to disclose offence (i.e. if there are only reasonable grounds for knowledge or suspicion and the staff member fails to make an internal report). However, such an omission is likely to open the business to the risk of prosecution for breach of the 2007 Regulations.

Note, however, that receiving insufficient training is not a defence to terrorist funding charges.

Communicating with clients

While not specifically required by the 2007 Regulations, businesses may consider it useful to tell their clients about their anti-money laundering/counter terrorist financing obligations. Clients are then generally more willing to provide required information when they see it as a standard requirement.

Businesses may wish to advise their clients of the following issues:

  • The requirement to conduct CDD to comply with the 2007 Regulations
  • Whether any electronic verification is to be undertaken during the CDD process
  • The requirement to report suspicious transactions

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