UK law and guidance
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) 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)).
Money Laundering Regulations 2017
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) effective on 26 June 2017, aim to ensure that the UK’s anti-money laundering regime implements the EU Fourth Money Laundering Directive and is in line with the Financial Action Task Force’s standards and recommendations. The regulations build on the Money Laundering Regulations 2007 and introduce some significant changes which are summarised here.
To help IFA members meet their obligations under the MLR 2017, in addition to guidance contained in the website, we have:
- developed an Anti-Money Laundering checklist. This checklist covers policies, controls and procedures, awareness and training, record keeping, firm’s risk assessment of money laundering or terrorist financing risks, client due diligence (CDD), reporting, supervision and monitoring requirements under the regulations; and
- provided an online Anti-Money Laundering Compliance software for free to our supervised firms.
HM Treasury is currently revising the MLR 2017 to implement the changes required by the EU Fifth Anti-Money Laundering Directive (5MLD). The Directive must be transposed into UK Law by 10 January 2020.
The government consulted on the Transposition of the EU Fifth Money Laundering Directive in June 2019. To date, there has been no government response to this high level consultation. However, the government has implemented the EU Fifth Money Laundering Directive by issuing on 20 December 2019 The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force on 10 January 2020.
Money Laundering Regulations 2019
The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR 2019), which came into force on 10 January 2020, implement the EU Fifth Money Laundering Directive in the UK, and follow a high level consultation in summer 2019.
These regulations make some limited but important amendments to the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). These include extending the scope of the regulated sector, changes to customer due diligence and enhanced due diligence, in particular a new requirement to make reports to Companies House in relation to discrepancies between information collected during customer due diligence and information on the Persons with Significant Control register.
Further information on the key changes is available here.
Proceeds of Crime Act 2002 (POCA 2002)
According to POCA 2002, a person can commit a money laundering offence if they:
- conceal, disguise, convert or transfer criminal property, or remove criminal property from England and Wales, or from Scotland or from Northern Ireland (section 327); or
- enter into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person (section 328); or
- acquire, use or have possession of criminal property except where adequate consideration was given for the property (section 329).
In addition to the money laundering offences, there are additional offences which only apply to the regulated sector (those in the scope of the MLR 2017) relating to failure to report a suspicion of money laundering (section 330) and 'tipping off' offence (section 333).
Further guidance on the POCA offences is available in Appendix A of the Anti-Money Laundering Guidance for the Accountancy Sector.
Anti-Money Laundering Guidance for the Accountancy Sector (AMLGAS)
The draft Anti-Money Laundering Guidance for the Accountancy Sector (AMLGAS) has been issued, pending approval from HM Treasury. This guidance is based on the law and regulations as of 10 January 2020.
This guidance covers the prevention of money laundering and the countering of terrorist financing. It is intended to be read by anyone who provides audit, accountancy, tax advisory, insolvency, or trust and company services in the United Kingdom and has been approved and adopted by the UK accountancy AML supervisory bodies
Please note that some of the requirements of the regulations relating to EU lists are expected to fall away at the end of the transitional period.
Additional guidance has been issued for those providing tax services in the United Kingdom, on the prevention of money laundering and countering of terrorist financing.
UK national risk assessment
HM Treasury has published the 2017 update of the UK National Risk Assessment of Money Laundering and Terrorist Financing (NRA). The first version was published in 2015.
The NRA sets out the key money laundering and terrorist financing risks for the UK, how these have changed since the UK’s first NRA was published in 2015, and the action taken since 2015 to address these risks.
The government has informed the IFA that the next national risk assessment will be issued in July 2020.
Circumstances where there might be high risk of money laundering or terrorist financing
The IFA, in co-operation with the Accountancy AML Supervisors’ Group, has identified a list of circumstances where there might be a high risk of money laundering or terrorist financing. Firms may find this guidance helpful when conducting their own firm-wide risk assessment of money laundering and terrorist financing as required by the MLR 17.
Flag it up campaign
The legal and accountancy sector are working with HM Government to support the Flag It Up campaign, a joint initiative that aims to raise awareness about the warning signs of money laundering.
- Visit the Flag It Up campaign page
- Watch the video aimed at accountants to raise awareness of the threat of money laundering
- Flag it Up Suspicious Activity Reporting Guidance
National Crime Agency (NCA)
- Guidance on making a Suspicious Activity Report (SAR) and requesting a Defence Against Money Laundering (DAML) is available on the NCA website
- UK FIU SARs Reporter Booklet which provides a snapshot of how law enforcement utilise SAR intelligence
- Money laundering and Terrorist financing controls in overseas jurisdictions - HM Treasury advisory notice
- Anti-Money Laundering and Counter-Terrorist Financing: Supervision Report 2015-17
Office of Financial Sanctions (OFSI)
- Who is subject to financial sanctions in the UK?
- Financial Sanctions Guidance, FAQs and information on monetary penalties
- Reporting a Suspected Financial Sanctions Breach
- Subscribe to receive free-email updates on financial sanctions