If you have a business relationship with a PEP or a family member or a known close associate of a PEP you must, as a minimum:. Under regulation 40 you must keep a copy of the documents and information you obtained to fulfil your CDD obligations.
You must also have sufficient supporting records of the transaction for it to be reconstructed for a period of five years following the completion of the transaction or the end of the business relationship. At the end of the five-year period you must delete any personal data in those records unless:.
Part 5 of the regulations imposes obligations on trustees of relevant trusts to:. For the purposes of part 5 of the regulations , a relevant trust is a UK express trust or an offshore express trust which is liable, even if only occasionally, to:. While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such.
The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.
Call the Practice Advice Service on or email practiceadvice lawsociety. Changes to the money laundering regulations should focus on increasing the effectiveness of efforts to tackle money laundering through a more risk-based and proportionate approach.
Anti-money laundering My LS. Quick guide to the Money Laundering Regulations If you work elsewhere in the regulated sector You need to consider whether you offer services which make you a: tax adviser insolvency practitioner trust or company service provider See regulations 11 d and 12 2 for definitions of these roles. Implement systems, policies, controls and procedures to address money laundering and terrorist financing risks and meet the requirements under the MLR You must establish and maintain written policies, controls and procedures to manage and mitigate the money laundering and terrorist financing risks identified in your risk assessment.
Provide training to staff As with the MLR , you will need to provide staff with appropriate training on money laundering and terrorist financing. Apply for approval if you are the beneficial owner, officer or manager of a firm The beneficial owners, officers or managers of your firm will have a year to apply to the SRA for approval, which must be granted unless they have been convicted of a relevant offence.
Where your client is a corporate body, you must obtain and verify: its name its company number or other registration and the address of its registered office and, if different, its principal place of business. In particular, the UK may target Russia with Magnitsky-style sanctions designed to punish human rights violations and as a response to the Salisbury poisoning incident in The FCA has the authority to wind up or restrict the operations of firms that are found guilty of wrongdoing and may also recover funds and assets that are involved in money laundering offenses via court or civil proceedings.
AML compliance breaches in the UK may also result in significant reputational damage for the firms involved. In practice, firms should perform AML risk assessments of their customers and the business sectors in which they operate and use that information to implement a proportionate response.
To avoid human error and potential compliance penalties, many firms automate AML processes with a range of smart technology tools. Automation not only adds speed, accuracy and efficiency to AML; it also helps firms adapt to new regulations and continue to deliver the highest standards of compliance.
Learn More. Disclaimer: This is for general information only. The information presented does not constitute legal advice. The failure to report suspicious activity in the circumstances set out in the relevant provisions constitutes a criminal offence.
Those operating in the regulated sector face criminal liability under section of POCA if they fail to make a report in circumstances where:.
Regulated firms are required to appoint a nominated officer. Once the nominated officer receives an escalation, they will then consider matters by reference to CDD materials and other information, and then decide whether to file a SAR.
A nominated officer will face criminal liability under section POCA if they fail to inform the NCA of disclosures they received under section , where they know or suspect, or have reasonable grounds to know or suspect another person is engaged in money laundering. The SAR must be made as soon as practicable after the information or grounds for belief came to that person. No offence is committed if there is a reasonable excuse for not making the disclosure, or the information came to a legal adviser or relevant professional adviser in privileged circumstances.
Those outside the regulated sector are not required to appoint a nominated officer, but non-regulated sector organisations that choose to appoint a nominated officer may also have an obligation to report suspicious activity under POCA. Liability only attaches to a nominated officer and not to other employees. However, the offence is not committed unless the nominated officer has actual knowledge or suspicion of money laundering.
It is a defence to a primary money laundering offence if an authorised disclosure is made to the NCA seeking consent to proceed with activity that would otherwise potentially constitute a money laundering offence and appropriate consent is given or deemed given before any act is done. An authorised disclosure is made via a SAR. If within that seven-working-day period, consent is refused, a moratorium period of 31 calendar days begins, after which consent is again deemed to have been given.
The moratorium period may be extended by the Crown Court a number of times up to a maximum of days, excluding the initial 31 days.
It is also an offence inside or outside the regulated sector to make a disclosure that is likely to prejudice the investigation, or to falsify, conceal, destroy or otherwise dispose of documents relevant to the investigation or cause or permit another person to do so, knowing or suspecting that an investigation is underway or planned section of POCA.
It is a defence to show that the person did not know or suspect that the disclosure was likely to prejudice the investigation. There is also a similar regime which applies to terrorist financing. The UK is placing an increasing emphasis on public-private partnership.
This began with the Joint Money Laundering Intelligence Taskforce JMLIT in , which allowed law enforcement agencies, the FCA and financial institutions to share information on types of money laundering and terrorist financing risk and organised crime groups. Consequently, the UK has assisted other jurisdictions to set up similar public-private partnerships. The NECC is intended to harness intelligence and capabilities from across the public and private sectors to tackle economic crime, with a focus on money laundering and corruption offences.
Who is responsible for maintaining the information? Is the information available to assist financial institutions with their anti-money laundering customer due diligence responsibilities as well as to government authorities? Concerns have been raised about its accuracy and in relation to the number of successful applications for information about PSCs to be suppressed from the register. There is also an obligation to report to Companies House any discrepancy found in relation to beneficial ownership between information collected from Companies House during the CDD process, and information that otherwise becomes available in the course of carrying out the duties under the Regulations see Regulation 30A 2.
Should such information also be included in payment instructions to other financial institutions? The Funds Transfer Regulation specifies what information must accompany electronic transfers of funds carried out by payment service providers.
The information about a payer must include their name, full postal address, and the account number or unique identifier that would allow the transaction to be traced back to the payer. If the full postal address is not known, the information should include either their date and place of birth, customer identification number or national identity number; for example, a passport number.
The complete information about a payee must include their name and account number or unique identifier to allow the transaction to be traced back to them. The complete information must be verified where there will be transfers on a regular basis or where a business relationship is developed. When determining whether to grant authorisation to payment service providers which undertake funds transfers , the FCA requires applicant firms to give an overview of their AML systems and controls, which includes the control mechanisms that the applicant firm will establish to ensure compliance with the Funds Transfer Regulation.
The list is set out in question 3. The FCA does not impose an equivalent requirement on firms that are within its supervisory purview, nor do the UK Money Laundering Regulations impose a similar requirement on non-financial institutions generally. The primary money laundering offences under POCA apply generally to all persons where conduct falls within its provisions.
A freeport is a warehouse or storage facility in an area designated by the Treasury as a special area for customs purposes. There are no other specific AML requirements applicable to persons engaged in international trade or to persons in certain geographic areas. The National Data Exploitation Capability NDEC is an initiative of the NCA intended to provide greater large-scale data analysis capabilities to support the understanding of data and to assist in profiling money laundering activities.
There are a large number of RegTech solutions, including artificial intelligence, data mining and analytics, real time reporting and machine learning, which assist in compliance with regulatory requirements. It identified key actions and set out seven priority areas: i understanding the threat posed by economic crime and performance metrics; ii better information-sharing within and between the public and private sectors; iii the powers, procedures and tools of law enforcement; iv enhanced capabilities to detect, deter and disrupt economic crime; v risk-based supervision and risk management; vi transparency of ownership of legal entities and arrangements; and vii international strategy.
Progress has been made in relation to the requirements of the plan, but there is still work to do. In an effort to improve transparency of ownership, the UK has stated its intention to have registers of beneficial ownership for three different types of assets: companies; trusts; and real estate property and land.
The PSC register regarding companies has been publicly available since The register for trusts was introduced in but is not public. The UK government has not yet announced a date for the introduction of legislation for a public beneficial ownership register for real estate property and land.
British Overseas Territories have committed to introduce registers of beneficial ownership by the end of Crown Dependencies have committed to do so after the EU reviews the implementation of its own public registers in or It had been asked by the government to review and make recommendations for reform of aspects of the SARs regime.
The Law Commission made recommendations including the introduction of an Advisory Board to oversee the drafting of guidance and to continue to measure the effectiveness of the regime. Registering your business with a supervisory body is fairly straightforward. You can find a full breakdown of how and who to contact over on GOV.
A successful risk-based approach will involve the following steps:. Money laundering regulations are updated periodically, in line with the evolving ways that financial crime is carried out. SmartSearch can assist you with AML compliance, every step of the way. Our accessible platform carries out a wide variety of automated checks, to assess your customer base thoroughly whilst remaining discreet.
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