Money Laundering Regulations

On 10 January 2020 changes to the Government's Money Laundering Regulations came into force. They 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. This page highlights some specific new areas that firms need to comply with.

The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 sets out the amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs).

We are consulting on consequential changes to the Money laundering and terrorist financing section of the Financial Crime Guide to reflect amendments to the MLRs. The consultation closes on 1 May 2020.

High-risk factors

Amendments to regulation 33 of the MLRs requires 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. These may occur where:

  • there are relevant transactions between parties based in high-risk third countries
  • the customer is the beneficiary of a life insurance policy
  • the customer is a third-country national seeking residence rights or citizenship in exchange for transfers of capital, purchase of a property, governments bonds or investment in corporate entities 
  • non-face to face business relationships or transactions without certain safeguards, for example, as set out in regulation 28 (19) concerning electronic identification processes.
  • transactions related to oil, arms, precious metals, tobacco products, cultural artefacts, ivory or other items related to protected species, or archaeological, historical, cultural and religious significance, or of rare scientific value

E-money thresholds for customer due diligence (CDD)

Among other things, amendments to regulation 38 regarding electronic money mean that firms can only forego customer due diligence measures in situations where:

  • the maximum amount which can be stored electronically is €150 (previously €250)
  • the payment instrument used in connection with the electronic money (the relevant payment instrument) is:

        - not reloadable, or 

        - is subject to a maximum limit on monthly payment transactions of €150, which can only be used in the UK (previously €250)

  • the relevant payment instrument is used exclusively to purchase goods or services
  • anonymous electronic money cannot be used to fund the relevant payment instrument

Customer due diligence

Amendments to regulation 28 require firms to update their records relating to the beneficial ownership of corporate clients. Firms also need to understand the ownership and control structure of their corporate customers, and record any difficulties encountered in identifying beneficial ownership.

Reporting discrepancies to Companies House

Regulation 30A is a new requirement for firms to report to Companies House discrepancies between the information the firm holds on their customers compared with the information held in the Companies House Register.

Duty to respond to requests for information about accounts and safe-deposit boxes

Coming into force on 10 September 2020, new Part 5A imposes duties on credit institutions and the providers of safe custody services to respond to requests for information, via a central automated mechanism. A law enforcement authority or the Gambling Commission may request details related to accounts and safe-deposit boxes including, but not limited to, name, date of birth and address of the holder(s) or beneficial owner(s).

Compliance under MLRs

We expect firms to comply with the new, amended regulations from 10 January 2020. In assessing our approach to firms that may not be compliant on that date, we will take into account evidence that they have taken sufficient steps before that date to comply with these new obligations.

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 us during 2020. Read more about the Cryptoassets: AML / CTF regime.