Treasury unveils anti-money laundering regime

The Treasury has unveiled plans to create a new watchdog and published updated money laundering regulations in a bid to tackle potential weaknesses in the supervisory system that criminals may be trying to exploit

There is to be a new office for professional body anti-money laundering supervision (OPBAS), which will be housed in the Financial Conduct Authority (FCA) and will operate within the FCA’s existing governance arrangements.

The new body is intended to bring together work currently supervised by 25 organisations, 22 of which are accountancy and legal services providers’ professional bodies. It will be funded through a new fee on professional body anti-money laundering (AML) supervisors and legislated for by the end of the year.

OPBAS should be operational by the start of 2018. It will set out how professional body AML supervisors should comply with their obligations in the new money laundering regulations and ensure they do so, with the powers to penalise any breaches.

These regulations set out new standards of supervision, including requiring that all supervisors draw on common factors when developing their risk assessments, and maintain records of their investigations and decisions on disciplinary action.

As guidance is updated to reflect the new regulations, the government will work to approve one piece of AML guidance for each sector to reduce and simplify the amount of guidance businesses need to follow. This tailored guidance will complement the joint money laundering steering group guidance and the FC’s crime guide.

The updated money laundering regulations will also provide clarity for firms on how they should treat politically exposed persons (PEPs). The government response to an earlier AML consultation outlines a series of steps to address concerns about the unjustified and disproportionate withdrawal or potential restriction of financial services from domestic PEPs, their families and close associates. The FCA will publish specific guidance on the treatment of low- and high-risk PEPs and will consult shortly.

The draft 2017 money laundering regulations are open for comment, with the expectation that legislation will come into force by 26 June. Amongst the changes are the proposal to increase the turnover threshold for persons engaging in financial activity on an occasional or very limited basis to £100,000.  There is also a summary of the risk factors for customer due diligence, with the expectation that more detailed examples for different sectors will be set out in sector-specific guidance, and further details on transposing the Fourth Money Laundering Directive and Fund Transfer Regulation into UK legislation.

Simon Kirby, economic secretary to the Treasury, said: ‘These changes are being introduced in response to the call for information on the AML supervisory regime and the cutting red tape review of the UK’s anti-money laundering and counter financing of terrorism regime. These identified ways to improve the effectiveness of the supervisory regime by removing unnecessary burdens without having a material impact on the fight against money laundering.’

The Treasury has launched a call for information on the powers and mandate for OPBAS, with responses by 26 April.

Anti-money laundering supervisory regime: response to the consultation, is here.

The consultation on the money laundering regulations 2017 is open until 12 April and details are here.

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