Agenda item

Item deferred from 1 February 2010. Report of the Head of Audit and Risk Management to advise the Audit Committee of the updated Corporate Anti-money laundering policy.

The Chair asked for an introduction of the report.

The Head of Corporate Finance – Mr Bartle, in an introduction, reminded the Committee of its responsibilities in respect of Anti-Fraud and Corruption arrangements as part of its Terms of Reference. In order to provide assurance that the corporate anti-money laundering policy was consistent with relevant professional guidance and other statutory and best practice requirements, it was reviewed on a regular basis, with approval for the final anti-money laundering policy resting with this Committee.  Mr Bartle commented that as part of the Chartered Institute of Public Finance and Accountancy’s (CIPFA) 2006 Code of Practice, and the requirements of the Council’s Whistle-blowing policy, this Authority needed to ensure that there were appropriate processes in place for the reporting and investigation of allegations of fraud and corruption.  The Comprehensive Area Assessment (CAA) included the requirements to have appropriate arrangements in place which were designed to promote and ensure probity. It was therefore important to ensure that the Council was able to demonstrate compliance with the CAA and best practice requirements.

Mr Bartle briefly outlinedHaringey’s approach to date by putting in place arrangements within the Council that comply with the regulations and reflect good practice, by demonstrating that the Council was acting prudently and to the proper professional standards that certain officers needed to follow. In respect of legal issues, the Law Society required the Council to have anti-money laundering policies and guidance in place and to complete regular returns in respect of money laundering. In respect of financial issues, the 2009 CIPFA guidance on combating financial crime was the key publication. The Council’s policy and procedures relating to money laundering included a section on due diligence (detailed at appendix A of the report). In most cases, the business undertaken would be where the client was another public or statutory body, and therefore the risk assessment would indicate that no further due diligence about the status of the client was required.

Mr Bartle went to advise that for other third party clients or politically exposed persons, there needed to be formal and recorded due diligence checks. In these rare circumstances, guidance on performing the due diligence checks would be provided by the Head of Audit and Risk Management, as part of their role as the Council’s Money Laundering Reporting Officer, in consultation with relevant officers from legal and corporate finance where appropriate.  Records would be maintained, including details of the customer due diligence, and were required to be kept for five years after the end of the business relationship and also transactions recorded, which also needed to be kept for five years.

Mr Bartle concluded that the Council’s policy had been circulated to all relevant staff and training had been provided to those staff that were most likely to deal with the transactions. It was recommended that the Council’s existing policy be incorporated into the corporate anti-fraud policy and strategy to ensure all elements of fraud and corruption were dealt with effectively and appropriately. These procedures would be made available on the Council’s intranet site and regular reminders provided to all relevant staff. Also and in addition, as part of the Council’s annual internal audit programme, testing of the key financial systems included checks in relation to money laundering to ensure that risks were being appropriately managed.  It was also the case that although local authorities were unlikely to be a prime target for money laundering, the size and scope of services was such that it was not possible to discount entirely the risks surrounding money laundering. The Council’s approach was designed to mitigate and minimise these risks.

The Chair thanked Mr Bartle for his concise introduction. In ascertaining whether there were any points of clarification, of which there were not, the Chair asked Ms Willis (the shadow Section 151 Officer) whether she was satisfied and concurred with the comments of the current Section 151 Officer. Ms Willis advised that as she did not formally take up her position until 1 April 2010 she was not in a position to give a formal view or concurrence to the comments given in the review.  However, Ms Willis advised that she did not personally disagree with the comments and she was satisfied with the basis of the approach, which in her view complied with the relevant best practice, and that the Council’s obligations were discharged.

There being no further points of clarification the Chair summarised and it was:

RESOLVED

i.          That the requirements of the various regulations on local authorities in respect of Anti-fraud and Corruption be noted together with compliance by this Council of the regulations to date;

ii.         That the updated Corporate Anti-money laundering policy be agreed; and

iii.        That approval be given to the inclusion of the policy as an appendix to the Council’s existing corporate anti-fraud strategy to ensure that all elements of fraud policy and strategy were held together and allowing for it to be publicised more effectively.