New money laundering regulations - The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the 2017 Regulations) – came into force on 26 June 2017.
These implement the EU’s 4th Directive on Money Laundering and replace the previous Money Laundering 2007 Regulations (the 2007 Regulations).
This article is intended to provide a brief introduction to the 2017 Regulations. It is not designed as detailed guidance.
Changes introduced by the 2017 Regulations
- The 2017 Regulations do not radically depart from the requirements of the 2007 Regulations but rather build upon and develop them.
- The 2017 Regulations do require a more risk-based approach towards money laundering. In particular, determining the level of due diligence to be undertaken requires analysis of risk factors set out in the regulations.
- They have also led to the creation of the Trusts Registration Service (TRS). All new and existing trusts, together with complex estates, need to supply information to HMRC via the TRS. See here for more details of the TRS.
Other changes in the 2017 Regulations include:
- A written risk assessment has to be undertaken and risk mitigation policies, controls and procedures must also be documented in writing.
- Depending on their size and nature, businesses may need to appoint a senior person to be responsible for compliance with the regulations (this can be the same person as the Money Laundering Reporting Officer).
- The use of simplified customer due diligence is more restricted: this was the default option for certain entities in the past, but under the 2017 Regulations a range of factors need to be considered to determine whether this is appropriate or enhanced due diligence is necessary.
- Conditions for relying on third party customer due diligence are more prescriptive.
- The rules on Politically Exposed Persons now extend to UK individuals.
- There is a new criminal offence of recklessly making a statement in the context of money laundering which is false or misleading.
Where to go for more information
The 2017 Regulations can be found here.
The Consultative Committee of Accountancy Bodies (CCAB) have published new draft guidance. This has been updated for the 2017 Regulations and will be sent to HM Treasury for approval later this year but in the meantime it is a helpful resource.
More guidance on anti-money laundering for ATT members can be found here. Non-ATT members should consult their relevant supervisory body for further information and assistance.