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.
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.
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 disclose knowledge or suspicion of money laundering (section 330) and 'tipping off' offence (section 333).
It is important to note that as of 2 June 2021, the Crown Prosecution Service (CPS) guidance now makes it possible to prosecute an offence under this provision regardless of whether an offence of money laundering has been substantiated. Therefore, Section 330 therefore creates an obligation to report suspicions of money laundering to the authorities, regardless of whether money laundering actually takes place.
Further guidance on the POCA offences is available in Section 2 of the Anti-Money Laundering and Counter-Terrorist Financing Guidance for the Accountancy Sector.
Anti-Money Laundering Guidance for the Accountancy Sector (AMLGAS)
The draft Anti-Money Laundering and Counter-Terrorist Financing Guidance for the Accountancy Sector has been updated for the amendments to the Money Laundering Regulations as at 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
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 issued the UK National Risk Assessment of Money Laundering and Terrorist Financing (NRA) 2020. The 2020 national risk assessment (NRA) is the third comprehensive assessment of money laundering and terrorist financing risk in the UK.
The national risk assessment of money laundering and terrorist financing 2020 (NRA) states that accountancy services remain attractive to criminals due to the ability to use them to help their funds gain legitimacy and respectability, as implied by the accountant's professionally qualified status.
The accountancy services considered most at risk of exploitation continue to be:
- company formation and termination,
- mainstream accounting; and
The NRA also highlights other risk areas, which we have incorporated into the risk sections below.
The NRA concludes that accountancy services are at highest risk of being exploited or abused by criminals when the accountant doesn’t fully understand the money laundering risks and does not implement appropriate risk-based controls.
Further information on circumstances where there might be high risk of money laundering or terrorist financing is available below.
Circumstances where there might be high risk of money laundering or terrorist financing
The Accountancy AML Supervisors’ Group has set out in their guidance the key risks and red-flag indicators the AASG consider are relevant to the accountancy sector. The AASG will update it on a regular basis, reflecting the UK’s National Risk Assessment and other emerging threats and trends.
Firms should regularly review this risk outlook to make sure they have identified all the areas relevant to their own business – particularly as the risk may evolve because of changes to the firm’s client base, geography and services provided.
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.
- Watch the video aimed at accountants to raise awareness of the threat of money laundering
- Flag it Up Suspicious Activity Reporting Guidance
- Red Flag indicators
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
- Money laundering and Terrorist financing controls in overseas jurisdictions - HM Treasury advisory notice
- Anti-money laundering and counter-terrorist financing: supervision report 2018/2019
Office of Financial Sanctions (OFSI)
The Office of Financial Sanctions Implementation (OFSI) helps to ensure that financial sanctions are properly understood, implemented and enforced in the United Kingdom.