MMi AML & Compliance Assistant

Why does the ID system exist?

To ensure that the client or user of our services is who they say they are and importantly to avoid fraud. As MM is a firm dealing with lending and property the avoidance of fraud is especially important.

• As has been the case for many years, there is a requirement for legal firms to confirm the identification of clients or users of their services.  MM deals with this using technology as far as possible but there are often additional requirements where you are using our remortgage services.
• Unless we have carried out your ID in the previous six months, in which case please tell us, a fresh identification needs to be carried out each time we carry out some work on your behalf.

Wherever possible we use technology to reduce the impact of the ID process upon you. We send you an electronic form to ingather information and to allow you to upload your latest ID material. We then use a reputable and widely adopted technology provider to confirm your identity.

Will we require more information?

• The service, which we use, will report back to us confirming whether certain parameters have been reached. That provides a score, and we will use that to establish whether we have sufficient information. 
• It is important to emphasise that there are many, many reasons why the system may suggest that further information is required. By far the most prominent of these is whether your current address has been authenticated. This is particularly case if you currently are renting property or have recently moved.

Where the system seeks more information then we will revert to you with a request generally for an additional document that has been addressed to you. Normally speaking that is that but on occasion we will need more information and whilst we totally accept that this is annoying and imposing, it is better to accept the regulations imposed upon us and to provide the information so that we can do our job.

We are not allowed by law to deal with your work unless we have been able to identify you to the requirements of our regulator Law Society of Scotland.  It is not a matter within our control.

What if you are not a UK citizen?

If you have UK residence, then there is no difference between you and somebody who is a UK citizen, but we do need to see evidence of the UK residency.

If you do not have a UK residence, then we may need more information to comply with the regulations and we will ask you for the additional material.

If we are struggling to meet the requirements of the regulations then we may ask you to provide Certified ID or use our MMiLive service. Both may involve an additional cost and a detailed within our terms of service.

Remortgaging

There are certain circumstances which mean that remortgages are seen by others and particularly lenders as higher risk.

Where the circumstances are triggered, there will be a request for certified ID or the use of MMI live.

These circumstances are: -

1. Remortgage or financial cases where there is capital raising more than £18,000
2. Remortgage or financial cases where the borrower does not live at the address of the property being financed (excluding some buy to let remortgages)
3. Where the value of the loan is more than £500,000
4. Where there is no existing mortgage

Back to the options at the top

The Coronavirus Pandemic significantly restricted the person to person contact normally required to obtain the enhanced ID required by your lender or ever-increasing regulation. The Scottish Government passed legislation enabling this enhanced ID to be dealt with using video recording technology. McVey & Murricane developed a process built round these new provisions, called MMiLivelD. 

Clients and users of our services have valued the flexibility of MMiLive and McVey & Murricane are delighted to continue to offer this groundbreaking service. The process follows a particular protocol and involves quite a bit of time; nevertheless we have managed to maintain the cost of the service at £50 + VAT (£60) per session with up to two persons.

Back to the options at the top

No matter how reputable you are, regulators assume that everybody may be money-laundering until proven otherwise. The best analogy is that of travelling through an airport. Before you have been through security, it is assumed that you may be a terrorist. The security process is intrusive but is there to ensure that you are not a terrorist.

Similarly, AML processes are there to prove a negative; that the funds you are using are not unlawful. The rules relating to AML are constantly updated. The current rules date back to 2017 and were updated in 2019. You can find the rules here.

If you are involved with

• a purchase or property acquisition
• a sale of a property where there is a shortfall of more than £5000
• a remortgaging or financing of the property where there is a shortfall of more than £5000
• other transactions or circumstances, triggered by regulations, of which we will advise you if they occur

then we need to carry out a "Source of Funds" process as required by our regulator and UK, EU (implemented before and remaining after Brexit and UN regulations).

These are complex regulations and often seem unfair and invasive. To assist our clients MM have developed a groundbreaking intelligent App called MMiFunds.

This App, in the case of a purchase will be sent to you immediately once the transaction has been passed to a solicitor or paralegal. In other cases, it will be sent to you when it becomes apparent that it is required.

Our previous system details are available here for transitional cases.

Back to the options at the top

It is vitally important to understand that crypto currency is important wherever it “touches” any funds that you intend to utilise for a transaction. As an example, if you have a current account with HSBC but you also had a crypto account with bitcoin which you have now liquidated and placed within your HSBC account, the entire HSBC account, for money-laundering purposes, is impacted by the bitcoin account. If the funds within the HSBC account are necessary for your transaction, then the impact of the bitcoin account is pivotal because the funds have been “intermixed”. The bitcoin "pollutes" the other money.

As the popularity of investing in cryptocurrencies continues to grow, MM are increasingly encountering cases where client deposit monies are, at least in part, derived from cryptocurrency investments. Research shows that most cryptocurrency transactions are entered into for legitimate purposes. However, because of their decentralised and quasi-anonymous nature, they are considered by global regulatory authorities and law enforcement as posing a high money laundering risk. While the sector is becoming more regulated (e.g. crypto exchanges and digital wallet custodians have been subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR2017) since January 2020), the higher financial crime risk associated with cryptocurrency transactions means enhanced due diligence checks are required to establish the provenance and legitimacy of any crypto-derived funds. Our obligation, as with all other sources of funds, is to prevent criminal property from being laundered through the purchase of real property or other assets.

UK Crypto Firms: There are three categories of UK crypto firm:

• Fully Registered: The MLR2017 have required crypto firms to register with the FCA for anti-money laundering supervision since January 2020. The list of registered firms is here. Generally, and subject to further due diligence checks outlined below, such firms are considered acceptable trading venues.
• Temporarily Registered: This category includes firms that are in the process of applying for registration under the MLR2017 and are operating under a temporary registration pending the outcome of that application. The list of applicant firms is here . The FCA have noted that appearing on this list does not mean that the FCA has assessed them as fit and proper. Our policy, therefore, is that such firms are not acceptable trading venues. We will not accept any deposit monies that derive from crypto investments held with such firms.
•  Unregistered: The FCA operates a list of crypto firms that it considers are operating in the UK without proper registration. The list of unregistered firms is here. MM  do not accept any funds derived from crypto investments held with such firms.

Non-UK Crypto Firms 

In our experience, the majority of cases involving crypto-derived deposit monies centre on three of the world’s largest crypto exchanges by volume:

• Binance,
• Coinbase; and
• Kraken

As the sector develops, we may encounter a wider range of trading venues. The crypto firm in each case must be subject to enhanced due diligence checks to determine their reputation and regulatory status in relevant jurisdictions. We can only accept reputable crypto firms that are fully regulated, registered, or otherwise supervised in countries which have adopted regulatory and financial crime regimes consistent with recommendations issued by the Financial Action Taskforce (FATF).

By far the easiest resolution is to avoid any monies that have been touched by bitcoin or any other crypto currency. If you have no option but to use funds that have been touched by crypto in relation to your transaction must let us know immediately using the MMiFunds App.

In such cases, it is likely that a forensic review will be necessary if there is to be any chance of the funds being utilised. Even then there is no guarantee that the funds will be approved by the forensic review. The forensic review will not cost less than £500 plus VAT (£600). It may cost a lot more.

Very few people are advertising the fact that when the benefits of crypto currency are discussed online or within popular media outlets, that crypto currency is often a nightmare to deal with in legal transactions. This is not limited to MM though, unusually among firms specialising in property transactions, we maintain an active interest in resolving this ever-increasing problem.

Back to the options at the top

We need to know how you have come about these funds. They may have been accumulated savings while you are working, an inheritance, a gift or as a result of investments or sales of property.

The App will lead you through the process, how you categorise the funds that you are sending and helping you through the process. The App uses the concept of different jam jars in looking at the sources of your funds.

The law requires to understand the provenance of the money - its history and how you accumulated it. Often this will be straightforward if you have been saving from your salaries. Other times it will be deeply complex as you have accumulated funds from lots of diverse sources. The recent sharp increase in house prices means that many people are having to look further afield for funds as the amounts which they had saved have proven insufficient in the odd post pandemic market.

Back to the options at the top

This is a timeline of the compliance journey through McVey & Murricane. It is really helpful to keep this in mind as you progress through the transaction.

The "Transfer Account" is one account to which, once we have advised you accordingly, you should transfer all of your funds into. At the relevant point we will ask you to pass to us securely a copy of the account showing all of the funds together and one account. At that point you will be able to transfer the funds to MM. We will provide you with detailed advice and instructions at the relevant point. Please do not transfer funds to us until we have provided you with instructions to do so.

MM will advise you of every step required but please use this note as an aide memoire.

Back to the options at the top