Anti-money laundering

5MLD: Trust Registration Service expansion statutory instrument

The Trust Registration Service expansion statutory instrument is likely to be laid over the next few months.

The statutory instrument would complete the transposition of the Fifth Money Laundering Directive (5MLD) into UK law.

This should answer the infraction proceedings commenced against the UK due to the delayed transposition of the 5MLD, following the technical consultation held earlier this year.

The amendments

The statutory instrument will include additional minor technical amendments to the regulations.

  • Listed company exemption: exempt firms from article 28(3A) if a company is listed on a regulated market
  • Correspondent banking: clarification that the requirement to carry out enhanced due diligence on non-EEA correspondent relationships applies to firms with correspondent relationships involving the execution of payments to match the wording of 5MLD
  • EDD for life insurance policy providers: the last amendment to the Regulations introduced requirements for:
    • firms to consider whether enhanced due diligence (EDD) is required if a customer is the beneficiary of a life insurance policy
    • financial institutions to take reasonable measures to verify the beneficial owner of a beneficiary at the time of pay-out where the customer is a beneficiary of a life insurance policy, is a legal person and presents a high risk of money laundering

The statutory instrument would make a correction in line with Financial Action Task Force standards to ensure that the requirements apply to the beneficiary of a life insurance policy that a financial institution is providing to a customer, rather than any customers who are beneficiaries of life insurance policies

  • Obligation of confidentiality: amendment of regulation 52(A) to allow HM Revenue and Customs to share information internally between its different functions while ensuring that the confidentiality and use of information provisions of the Commissioner for Revenue and Customs Act are applied
  • FCA’s power of direction in relation to cryptoasset businesses: minor clarification concerning the Financial Conduct Authority’s (FCA) ability to issue directions to cryptoasset businesses to change their behaviour
  • Discrepancy reporting: clarification that:
    • discrepancies only have to be reported when establishing new business relationships
    • obliged entities can outsource the reporting of discrepancies if their other customer due diligence duties are outsourced
    • obliged entities must maintain a record of relevant documents related to carrying out their discrepancy reporting obligation and
    • discrepancies must be reported when simplified customer due diligence is applied
  • Electronic identification: minor amendment to clarify what ‘assurance’ means in the context of electronic identification

These changes may require minor amendments to guidance.

Guidance is yet to be submitted for HM Treasury approval following the main 5MLD statutory instrument appropriate to incorporate these minor changes prior to submission.

See the latest amendment to the Money Laundering Regulations

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