1.1 Money laundering is the process by which criminally obtained money or other criminal property is exchanged for “clean” money or other assets with no obvious link to their criminal origins. The term is used for a number of offences involving the integration of “dirty money” (i.e. the proceeds of crime) into the mainstream economy. The aim is to legitimise the possession of such monies through circulation and this effectively leads to “clean” funds being received in exchange.
1.2 The UK anti-money laundering regime requirements are set out in the Proceeds of Crime Act 2002 (POCA) (as amended by the Serious Organised Crime and Police Act 2005 (SOCPA)), the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR) and the Terrorism Act 2000 (TA 2000) (as amended by the Anti-Terrorism, Crime and Security Act 2001 (ATCSA 2001) and the Terrorism Act 2006 (TA 2006).
1.3 This Policy will be reviewed as necessary in the light of any changes of circumstances, including the introduction of new products or technology, new methods of payment by customers, changes in the customer demographic or any other material changes, and in any event reviewed at least annually.
1.4 The Labour Party is committed to establishing and maintaining effective arrangements to prevent and detect attempts to launder money via the Labour Lottery. The Labour Party requires all employees to demonstrate the highest standards of honesty and integrity and this includes compliance with the relevant anti-money laundering legislation. The Labour Party is committed to working constructively with the police and other relevant agencies in relation to combating money laundering and ensuring compliance with the legislation.
1.5 The Labour Party will seek to ensure the corporate stance on money laundering is widely publicised and that employees are provided with relevant training on what to do if they suspect money laundering, who to report to and have access to the appropriate guidance. A breach of these procedures may lead to disciplinary action and/or prosecution by the relevant authorities.
2.1 This Policy applies to all employees of the Labour Party, including temporary and agency staff. It contains specific sections to advise employees of the processes to be followed to enable the Labour Party to comply with its legal obligations.
2.2 This policy is designed to ensure all appropriate action is taken to prevent, wherever possible, Labour Party employees from being exposed to or becoming involved in money laundering and to comply with all legal and regulatory obligations, including the reporting of suspected or actual cases of money laundering in compliance with disclosure requirements.
2.3 In accordance with the requirements of the Gambling Commission, this Policy applies to the activities of the Labour Party inasmuch as they relate to the Labour Lottery. The Policy does not relate to the Labour Party’s broader fundraising or commercial activities or the Party’s donations and loans which are regulated separately by the Electoral Commission pursuant to the Political Parties, Elections and Referendums Act 2000.
What is money laundering?
3.1 Money laundering is the process by which criminally obtained money or other assets (criminal property) are exchanged for ‘clean’ money or other assets with no obvious link to their criminal origins. Criminal property may take any form, including money or money’s worth, securities, tangible property and intangible property. It also covers money, however come by, which is used to fund terrorism.
3.2 Typically, money laundering happens in three stages:
- Placement – the laundering of criminal proceeds is often required because of the cash- intensive nature of criminal activities. The physical cash is placed into the financial or retail system, or smuggled into another country.
- Layering – this is an attempt to mask or disguise the source and ownership of the criminal proceeds by creating layers of financial transactions which obscure the audit trail and provide anonymity. Layers are created by moving funds in and out of various accounts and using electronic fund transfers.
- Integration – this is the final stage and involves integrating the criminal proceeds into the legitimate economic and financial system.
3.3 The consequences of committing an offence are potentially serious and fall within Proceeds of Crime Act 2002 (POCA 2002) Part 7 – Money Laundering Offences. Failing to reveal a suspicion or ‘tipping off’ of a case of money laundering are also offences. In the UK, offences related to money laundering may result in being fined (unlimited) or a prison sentence (up to 14 years) or both.
3.4 Section 327 of POCA provides that a person commits an offence if they conceal, disguise, convert, transfer or remove criminal property from the United Kingdom. Concealing or disguising property includes concealing or disguising its nature, source, location, disposition, movement or ownership, or any rights with respect to it.
3.5 Section 328 of POCA provides that a person commits an offence if they enter into or become concerned in an arrangement which they know or suspect facilitates, by whatever means, the acquisition, retention, use or control of criminal property by or on behalf of another person.
3.6 Section 329(1) of POCA provides that a person commits an offence if they acquire, use or have possession of criminal property.
3.7 While POCA places responsibilities on operators, the legislation also gives them protection if they report suspicious activity. Operators will have a defence to the principal money laundering offences in sections 327, 328 or 329 of POCA if they make an authorised disclosure under section 338 of POCA prior to the offence being committed and obtain a defence (appropriate consent) under section 335 of POCA (the consent defence) or intended to make an authorised disclosure but had a reasonable excuse for not doing so (the reasonable excuse defence).
3.8 Section 332 of POCA creates a separate offence of failure to disclose in respect of nominated officers outside of the regulated sector who receive disclosures and who do not pass the information to the National Criminal Intelligence Service (NCIS) as the disclosure receiving agency when they know or suspect; or have reasonable grounds for knowing or suspecting that another person is engaged in money laundering.
3.9 Section 333 of POCA creates the offence of making a disclosure likely to prejudice a money laundering investigation being undertaken by law enforcement authorities.
What are the obligations of the Labour Party?
Organisations conducting “relevant business” must:
- Carry out a money laundering and terrorist financing risk assessment, and review it at least annually and when new risks arise.
- Adopt a risk-based approach and manage and mitigate money laundering risks in a proportionate way.
- Appoint a Money Laundering Reporting Officer (“MLRO”) to receive disclosures from employees of money laundering activities (their own or anyone else’s).
- Implement a procedure to enable the reporting of suspicions of money laundering;
- Maintain client identification procedures in certain circumstances; and
- Maintain recordkeeping procedures
4.1 A senior member of Labour Party staff shall be appointed the Senior Responsible Officer (“SRO”) for ensuring compliance with this Policy and the legal obligations of the Labour Party in respect of anti-money laundering legislation. The Labour Party’s National Executive Committee (NEC) shall have oversight of the Party’s compliance with anti-money laundering legislation via existing reporting and monitoring processes established by the NEC’s terms of reference.
4.2 The SRO shall be responsible for overseeing the activities of the Labour Lottery and conducting a risk assessment which shall assess all of the activities of the Labour Party inasmuch as they relate to the Labour Lottery and their potential exposure to money laundering.
4.3 This process shall ensure an adequate record of all of the Labour Lottery activities are recorded on an ongoing basis and shall ensure the risk assessment is subject to review at regular intervals, but at least annually.
Labour Party Staff
5.1 All Labour Party employees shall be subject to vetting prior to appointment to ensure they have no connection or history of involvement in organised crime or money laundering activities. This shall include checking the qualifications and references of prospective employees and carrying out DBS checks on all staff involved in the Labour Lottery.
5.2 All employees the Labour Party involved in the Labour Lottery must undertake training on the law relating to money laundering, terrorist financing and data protection (insofar as the law on data protection relates to money laundering and terrorist financing). All employees shall also be regularly given training on how to recognise and deal with transactions and situations that may be related to money laundering or terrorist financing.
5.3 All Labour Party employees shall be provided with a copy of this Policy on appointment and all employees must confirm they have read, understood and will fully comply with the Policy at all times while working for the Labour Party.
Money Laundering Reporting Officer
6.1 The Labour Party shall appoint a senior officer within Labour Party Staff as the Money Laundering Reporting Officer (“MLRO”), who shall also be the SRO. If an individual member of staff becomes aware that their involvement in a matter that may amount to money laundering then they must report it to the MLRO and not take any further action until they have received consent from the MLRO, who may have to be granted such consent by the National Crime Agency (“NCA”).
6.2 Where an employee suspects money laundering activity, they must disclose this as soon as practicable to the MLRO. The disclosure should be within hours of the information coming to their attention, not weeks or months later.
6.3 The report must include as much detail as possible, for example:
- Full details of the people involved (including employee, if relevant);
- Full details of the nature of their involvement;
- The types of money laundering activity involved (see below in Appendix A – Possible Signs of Money Laundering);
- The dates of such activities, including whether the transactions have happened, are ongoing or are imminent;
- Where they took place;
- How they were undertaken;
- The (likely) amount of money/assets involved;
- Exactly why there are suspicions; the NCA will require full reasons;
- Any other relevant available information to enable the MLRO to make a sound judgment as to whether there are reasonable grounds for knowledge or suspicion of money laundering and to enable them to prepare their report to the NCA, where appropriate.
6.4 Once the matter has been reported by a Labour employee to the MLRO then any subsequent directions provided must be followed. Further enquiries into the matter should not be made by the employee; any necessary investigation will be undertaken by the NCA.
6.5 Should allegations be raised regarding Labour staff then the Labour Party’s Disciplinary Policy shall also be engaged.
6.6 Any information containing personal and/or sensitive data which is supplied or processed during the course of a money laundering investigation shall not be processed wider than is absolutely necessary for the purposes of determining whether a money laundering offence has been committed.
6.7 All disclosure reports made to the NCA must be retained by the Labour Party for a period of five years.
6.8 The Labour Party has designated Andrew Whyte as the MLRO. In the absence of the MLRO or in instances where it is suspected that the MLRO is involved in suspicious transactions, concerns should be raised with Alex Barros-Curtis.
6.9 The MLRO will nominate Alex Barros-Curtis to act as their deputy except in the instance that it is suspected that the Senior Internal Auditor is involved in suspicious transactions.
6.10 If the MLRO changes for any reason, this will be reported to the Gambling Commission as an LCCP notification within 14 days of the event occurring.
Labour Lottery Due Diligence
7.1 The requirement for customer due diligence applies immediately for new customers to the Labour Lottery and should be applied on a risk basis for existing customers. Ongoing customer due diligence must also be carried out during the life of a business relationship but should be proportionate to the risk of money laundering and terrorist funding, based on the relevant officers’ knowledge of the customer and a regular scrutiny of the transactions involved.
7.2 Only natural persons shall be allowed to enter the Labour Lottery. Companies or any other legal persons or unincorporated associations will not be allowed to enter the Labour Lottery. Each new customer to the Labour Lottery shall only be entitled to one membership of the lottery and must not have multiple accounts or memberships simultaneously.
7.3 No payment for entry to the Labour Lottery will be accepted in cash (including notes, coins or travellers cheques in any currency). Payments will always be completed via debit card payment, direct debit, or cheque.
7.4 Prizes from the Labour Lottery must not be paid to winning entrants in cash including notes, coins or travellers cheques in any currency). Prizes will only be paid via bank transfer, BACS, or cheque made out to the winner (prizes are non-transferable).
7.5 Entries to the Labour Lottery are subject to a maximum amount of £20.00 per week per entrant. No entrant shall be able to pay in excess of £20.00 in entries to the Labour Lottery in any one week.
Possible Signs of Money Laundering
Types of risk factors which may, either alone or along with other factors, suggest the possibility of money laundering activity include the following:
- A new customer with no previous history or connection with the Labour Party (i.e. no previous membership or history of campaigning for the Party);
- A secretive customer: for example, one who refuses to provide requested information without a reasonable explanation;
- Concerns about the honesty, integrity, or identity of a customer;
- Illogical third party transactions: for example, unnecessary routing or receipt of funds from third parties or through third party accounts;
- Involvement of an unconnected third party without logical reason or explanation;
- Attempts to make payment of substantial sums in cash (but it’s reasonable to be suspicious of any cash payments particularly those over £1,000);
- Overpayments by a customer;
- Absence of an obvious legitimate source of the funds;
- Movement of funds to/from overseas, particularly to and from a higher risk country;
- Where, without reasonable explanation, the size, nature and frequency of transactions or instructions is out of line with normal expectations;
- A transaction without obvious legitimate purpose or which appears uneconomic, inefficient, or irrational;
- Cancellation or reversal of an earlier transaction;
- Requests for release of customer account details other than in the normal course of business;
- A previous transaction for the same customer which has been, or should have been, reported to the MLRO.