Money Laundering Regulations 2019

By Joseph Paice | Uncategorized | 0 Comments

The FCA has published an update for the Government’s Money Laundering Regulations with new rules coming into force on 10th January 2020. The new standards update the UK’s AML regime to incorporate international standards set by the Financial Action Task Force (FATF) and to transpose the EU’s 5th Money Laundering Directive.

The primary objective of 5MLD is to ensure the existing framework is effective and up-to-date with the current financial environment. To prevent the misuse of the world’s financial system, increasing transparency into often murky financial activity that slips past current due diligence measures is an essential part of the new regulations.

Below you can find a brief summary of the areas that firms need to comply with.

High-risk factors

The MLRs will now require firms to include new additional high-risk factors when assessing the need for enhanced due diligence, and seek additional information and monitoring in certain cases, for example, where there are relevant transactions between parties based in high-risk third countries.

When it comes to transactions from or involving high-risk countries, 5MLD requires enhanced due diligence. This will cover obtaining evidence about the source of funds, any information regarding beneficial ownership and background details relevant to the planned transaction.

E-money

5MLD will lower the existing EUR 250 threshold for identification to EUR 150 in respect of non-reloadable prepaid payment instruments to which CDD measures apply when used face-to-face. More stringent provisions will also apply for prepaid cards used on the internet, so that anonymous use will not be possible online.

Customer due diligence

One particular area of the CDD process which has been significantly impacted by technological advancement remains the possibility of conducting electronic verification. 5MLD sets out the circumstances under which secure, remote or e-verification processes may be taken into account when undertaking CDD. 5MLD sets out the circumstances under which secure, remote or e-verification processes may be taken into account when undertaking CDD.

Registers of Beneficial Ownership

The Fourth Directive introduced the requirement for Registers of Beneficial Ownership. The Fifth Directive proposes to go further by allowing public access to these records, even without having to demonstrate any kind of ‘legitimate interest’.

Cryptoassets activities

Businesses carrying out certain cryptoasset activities will need to comply with the MLRs in relation to those activities from 10 January 2020, and to register with the FCA during 2020. Read more about the Cryptoassets: AML / CTF regime.