The government is consulting on the transposition of the 5th EU Money Laundering Directive into UK law.
It is also consulting on several proposals based on the findings of the recent Financial Action Task Force Mutual Evaluation Report on the UK’s anti-money laundering (AML) regime.
Among other issues, the proposals include:
- changes to the customer due diligence and enhanced due diligence measures that must be applied to particular clients and matters
- a new reporting obligation on 'obliged entities' in relation to information on the Persons of Significant Control register
- the expansion of the trusts beneficial ownership register held by HM Revenue and Customs
- a call for further information on the treatment of pooled client accounts under the Money Laundering, Terrorists Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the Regulations)
Our position is that the government should not "gold plate" the provisions of the 5th Directive.
We welcome the government's commitment to avoid gold plating unless "there is good evidence that a material money laundering risk exists that must be addressed".
Amendments to the Regulations must be effective and proportionate and should not impose an excessive burden on legitimate businesses in the absence of genuine money laundering or terrorist financing risks.
We recognise that the government is somewhat constrained by the text of the 5th Directive and so we have made recommendations on how the provisions of the 5th Directive should best be implemented.
We have opposed the proposals that we consider go beyond the requirements of the 5th Directive and are not proportionate to the money laundering risks they are intended address.
What this means for solicitors
The transposition of the 5th Directive will result in amendments to the Money Laundering Regulations, affecting those who carry out regulated work.
Firms will need to update their AML policies, controls and procedures to ensure they comply with the changes to the Money Laundering Regulations.
Firms that act for trusts will need to familiarise themselves with the changes to the registration requirements so that they are able to advise trustees.
The consultation closed on 10 June 2019 and the government is considering responses.
The deadline for transposition of the 5th Directive is 10 January 2020.
We also expect a technical consultation on the trusts registration aspect of the 5th Directive later in 2019.
View the consultation on the GOV.UK website