LSAG anti-money laundering guidance approved by Treasury

According to the Money Laundering Regulations 2017, the guidance now has full standing, including in regulation 86(2)(b)(ii).

This specific regulation sets out that when judging whether a legal practitioner or practice has committed an offence by not following the regulations, the court must decide whether the guidance has been followed.

It is similarly relevant where the imposition of civil penalties is being considered (under regulation 76).

Now the guidance is approved by HM Treasury, firms must consider it when deciding how to comply with the regulations, specifically:

• regulation 19 – policies, controls and procedures
• regulation 21 – internal controls
• regulation 24 – training
• regulation 35 – enhanced due diligence on politically exposed persons

Summary of changes

• Updates around the verification of the identities of beneficial owners (6.14.10), which underlines the expectations of supervisors and HM Treasury for new beneficial owners to be verified, in general, to the same standard as you would apply to a client that is a natural person
• The UK's list of high-risk third countries replaces the EU lists (5.6.2.1, which relates to risk assessments, and 6.19.1, which relates to EDD)
• Small clarifications to the section on legal professional privilege, particularly where it may not apply as you know or suspect a money laundering offence has occurred, invoking the need to make a suspicious activity report (13.4.2 and 13.4.3)
• Clarification on what is not 'an arrangement' for the purposes of POCA (16.3.6) and further clarification on the 'adequate consideration' defence (16.4.2)

There are several other minor amendments (mainly corrections and/or formatting changes).