ECSH21025 - Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) came into force on 26 June 2017 replacing the Money Laundering Regulations 2007 and the Transfer of Funds (Information on the Payer) Regulations 2007, with updated provisions that implement in part the Fourth Money Laundering Directive (4MLD or 鈥渢he Directive鈥�) 2015/849/EU and the Funds Transfer Regulation (FTR) 2015/847/EU. It represented a significant overhaul of the UK Anti Money Laundering (AML) regime.

Some听key听new听elements of听MLR 2017听are:听听

  • A听new approvals test for High听Value听Dealers (HVDs), Estate听Agency听Businesses听(EABs)听and Accountancy听Service听Providers,听(ASPs)听and extension of the Fit听&Proper听regime for Money听Service听Businesses听(MSBs)听and Trust or Company听Service听Providers听(TCSPs).听

  • HMRC agreed to host a central register of all businesses carrying out TCSP activities and听which听are not supervised by the听Financial听Conduct听Authority (FCA).听

  • A听requirement for businesses听to听maintain听written risk assessments and policies,听controls听and procedures.听

  • New听enforcement powers for tackling non-compliant behaviour,听and听a requirement to publish details of the non-compliant.听

  • The听extension of EAB due diligence checks to cover both buyer and seller.听

  • New听obligations for the transfer of funds supervisors (FCA and HMRC), and new obligations for payment service providers themselves.听

  • Simplified Due Diligence is no longer automatic听for supervised听businesses. These businesses听are first required to听ascertain听that the business relationship or transaction presents a lower degree of听risk.听

听5th听EU Money Laundering Directive听(5MLD)听

This听entered听into force on 10 January听2020, amending听the听4MLD.听The UK鈥檚 transitional arrangements on leaving the European听Union (EU)听applied; and it听began听transposing relevant听5MLD听requirements听into听UK law.听听

听Key elements:听

  • Extension of sectors that are now听supervised听businesses and听in scope:听听

听 听 听 听 听(a) Crypto asset exchange providers听(FA-supervised)听

听 听 听 听 听(b) Custodian wallet providers听(FCA-supervised)听

听 听 听 听 听(c) Letting agent听businesses (LAB)听

听 听 听 听 听(d) Art听market participants (AMP)听

  • Customer听Due听Diligence听(CDD)听in onboarding:听recognising听the growing use of听electronicidentity听verification听(EIV)and听an option听to conduct EIV with a trust service.听听

  • Enhanced CDD: now required for relevant transactions where either party is established in ahigh-risk third country, or transactions which are complex, unusually large, have no apparent economic or legal purpose, orwhere there are unusual patterns of transactions.听听听

  • Politically Exposed Persons (PEP): member states required to keep an up-to-date list of public functions.听

  • Beneficial ownership: it now requires discrepancies relating to beneficial owner information foundin the course of听CDD to be reported.听

  • Pre-paid cards: CDD to be conducted to identify holders of pre-paid cards at a reduced threshold of听鈧�150 from 鈧�250.听听

  • Financial Intelligence Units (FIUs) and information sharing: FIUs have the authority to obtain information from permitted authorities from the creation听of a central bank account and payment transaction registers and electronic data retrieval systems, even if a Suspicious Activity Report (SAR) has not been filed.听

For more information see ECSH 21125