UK economic crime regime
Money Laundering Regulations 2017
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs 2017) set out the main anti-money laundering (AML) requirements for firms.
This legislation has been amended by the:
- Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which came into force on 10 January 2020 and implemented broad changes to the MLRs
- Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020, which made narrow changes mainly to the requirements around trust registration
The Money Laundering and Terrorist Financing (Amendment) Regulations 2023 further amend the MLRs 2017 to require enhanced due diligence (EDD) on domestic politically exposed persons (PEPs) to be less than in relation to foreign PEPs (as required by the Financial Services and Markets Act 2023).
The 2023 regulations come into force on 10 January 2024.
The other main pieces of legislation to be aware of are the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000 (TACT), which set out the main requirements to report suspicious activity to the National Crime Agency and related offences.
Economic Crime Act 2022
The Economic Crime (Transparency and Enforcement) Act 2022 introduced:
- the register of overseas entities holding UK real estate
- strengthened unexplained wealth orders
- a strict civil liability test for monetary penalties for sanctions enforcement
Economic Crime Act 2023
The Economic Crime and Corporate Transparency Act 2023 introduced:
- a regulatory objective to the Legal Services Act 2007 on tackling economic crime
- reforms to Companies House to prevent the creation of, and shutting down, fraudulent companies
- reforms to prevent the abuse of limited partnerships
- additional powers to seize and recover suspected criminal cryptoassets
- a ‘failure to prevent fraud’ offence
- measures to address strategic lawsuits against public participation (SLAPPs)
Changes to UK company law
The Economic Crime and Corporate Transparency Act will introduce a number of changes over the next few years.
UK sanctions regime
The Sanctions and Anti-Money Laundering Act 2018 provides the main legal basis for the UK to impose, update and lift sanctions.
Criminal Justice Bill
The Criminal Justice Bill includes economic crime measures on:
- reforming the confiscation regime to address concerns on complexity and enforcement
- enabling a corporate body or partnership to be held criminally liable where a “senior manager commits non-economic crime related offences while acting within the actual or apparent authority granted by the organisation”
- a voluntary suspended funds scheme to allow the financial sector to transfer monies that they hold suspended on suspicion of criminality to government
- a ban on the possession and supply of “SIM farms”
- law enforcement powers to block access to domain names and IP addresses used to conduct criminal activities
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The anti-money laundering guidance for the legal sector is designed to help legal professionals and firms comply.