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HMRC internal manual

Money Laundering Regulations: Compliance

Compliance checks involving visits: The Interview

A good starting point will be checking the businesses registration details:

  • Confirm the business name, address and legal entity is correct
  • Confirm the names of the key personnel in the business (owners, directors and NO’s) and check that they have been given “Fit & Proper” status by HMRC (refer to the MLR web page for further information on fit and proper tests.
  • Ask the individuals subject to the F&P test if there have been any changes that would affect their F&P status For further information on who is subject to the f&P test refer to MLR9
  • Confirm that the NO is an employee of the business or group
  • Check that the number of premises in the businesses records agrees with the number on DTR
  • Confirm that the business has a copy of MLR8
  • Ask if s/he understands what they are required to do by the new regulations or if there is anything that they wish to have explained or to discuss with you

Once the officer is content with the basic details they can then ask the business about any areas of the risk based approach which they are unsure of. This will give officers a good idea of any areas of risk. If the business does not understand something it may be non compliant in this area. Once the business has been given an opportunity to ask questions the Officer should start by asking the six questions referred to at MLR3C7250 in respect of the risks that have been identified.

It will be necessary to use appropriate interviewing skills to ensure the replies are sufficiently detailed to identify any weaknesses in the policies and procedures. A constructive dialogue with the business will be essential and this should also help Officers evaluate what behaviours are being demonstrated by the business.

Officers may find the RBA questionnaire a useful basis for an interview but should bear in mind that this is a simple document and supplementary questions may be required to fully establish the businesses risks and controls.

Guidance on risk factors and particular issues arising for Bureaux De Change, Money Transmitters and Cheque Cashers (the higher risk businesses) is available in Appendices 7, 8 and 9 in Notice MLR-8.For HVDs, ASPs and TCSPS these can be found at Appendices 10, 11, and 12 of Notice MLR-8

Once the business activities, risks and control procedures have been established through interview and recorded. Officers should carry out further work to make sure that the risks have been assessed correctly and that the controls in place are appropriate and being followed consistently. This should be done through the compliance processes of confirming, evaluating and testing.

Once Officers have a good understanding of the policies and procedures they need to consider:

  • How effective have they been in practice?
  • Have the requirements for appropriate risk based policies and procedures been met?

These can then be tested by examining the business records. Based on their knowledge of the business Officers will also need to consider the extent of the records examination they need to conduct to effectively test compliance with these requirements.

They also need to check that the business understands and is taking advantage of the simplified procedures.

Officers need to carry out checks on a risk basis and ensure that any sample check is representative.

Officers then need to consider how they will test if appropriate SARs have been submitted and if Sanction List checks have been undertaken effectively.