Money Laundering Regulations Changes

Written by Thistle Initiatives - Compliance consultancy | Jul 27, 2022 11:00:00 PM

What has happened?

HM Treasury conducted a consultation between 22 July and 14 October 2021, inviting views and evidence on the steps it proposed to take to amend the Money Laundering Regulations. The response to the consultation summarises views from responses to the consultation and sets out the findings and the decisions the government has taken as a result. Many of these changes will be implemented through the Money Laundering and Terrorist Financing (Amendment) (No.2) Regulations 2022 Statutory Instrument.

What are the key points?

The key points from HM Treasury’s response to the consultation were as follows;

The consultation proposed excluding Account Information Service Providers (AISPs) from the regulated sector, given that the likely risk of money laundering and terrorist financing had been assessed as low.

On balance, the government has decided to remove AISPs from the regulated sector but keep PISPs within scope at this time.

The consultation proposed excluding Bill Payment Service Providers (BPSPs) and Telecoms, Digital and IT Payment Service Providers (TDITPSPs) from the regulated sector, given that the likely risk of ML/TF had been assessed as low by HM Revenue and Customs in relation to the specific (small) payment service providers (PSPs) supervised by them.

The government believes that it would not be appropriate to remove BPSPs and TDITPSPs from the scope of the MLRs at this time.

The consultation sought views on options to improve consistency of approach to accessing Suspicious Activity Reports by supervisors.

The government will be taking this amendment forward through the SI. The measure will introduce a clear legal gateway for AML/CTF supervisors to access, view and consider the quality of the content of SARs submitted by supervised populations, provided they are necessary to fulfil supervisory functions.

The consultation proposed changes to implement the Financial Action Task Force (FATF) standards in respect of Recommendation 1, to require financial institutions (FIs) and designated non-financial businesses and professions (DNFBPs) to identify, assess and take effective action to mitigate proliferation financing (PF) risk.

The government has decided to take this measure forward through this SI to enable the UK to implement international standards set by the FATF, by supplementing Regulations 16,17 and 18 of the MLRs, and to strengthen the private sector’s understanding and mitigation of proliferation financing risk.

The consultation proposed to improve the Regulation 52 gateway in the MLRs, to allow for wider information-sharing and disclosure to a range of bodies, and to reduce the existing barriers to sharing information and intelligence that inhibit effective AML/CTF supervision.

In light of the responses provided, and after further discussion with key stakeholders and AML/CTF supervisors, the government will amend Regulation 52 to expand the intelligence and information-sharing gateway to allow for reciprocal sharing from relevant authorities (specifically law enforcement) to supervisors, expand the list of ‘relevant authorities’ to explicitly include certain parts of BEIS, to support their functions under the MLRs and enable the FCA to disclose the confidential information it receives, in relation to its MLR duties, more widely.

The consultation set out the government’s proposed changes to comply with the expansion of the application of FATF Recommendation 16, regarding information sharing requirements for wire transfers, to cryptoassets (known as the ‘Travel Rule’).

The government has decided to allow a 12-month grace period, to run from the point at which the amendments to the MLRs take effect until 1 September 2023, subject to Parliamentary approval, during which cryptoasset businesses will be expected to implement solutions to enable compliance with the Travel Rule.

How can we help you?

If you’d like to know more about how we can help you with your financial crime arrangements, or any other regulatory compliance issues, our specialist team is here to help.

View full post