Money Laundering Regulations 2007
New anti-money laundering regulations will take effect in the UK on December 15th 2007 as the Government attempts to tackle the serious and ever changing threats from crime and terrorism, which is often fuelled by finance.
HM Treasury is hoping the Money Laundering Regulations 2007 will detect, disrupt and deter crime and terrorism through a range of strategies, including measures to restrict criminal access to the financial system.
Paul Schofield, head of Farleys Special Casework and Serious Crime Unit, examines the impacts of the new regulations, which will affect most UK financial firms, including banks, building societies, bureaux de change, cheque cashers, savings and investment firms, as well as legal professionals (when undertaking some activities), accountants, tax advisers, auditors, insolvency practitioners, estate agents, casinos, high value dealers when dealing in goods worth over €15,000 or company service providers.
The UK is part of an international effort to meet the challenge of money laundering, and the Money Laundering Regulations 2007 are an attempt to implement the European Union's 2003 Third Money Laundering Directive in the UK.
The types of firms listed above are required to put preventative measures in place to ensure they know their customers, including conducting customer identification and verification and undertaking ongoing monitoring where applicable, as well as keeping records of identity and to train their staff on the requirements of the Regulations.
Money laundering and terrorist financing is a criminal offence under the Proceeds of Crime Act 2002 and the Terrorism Act 2000, and it is these two Acts, which impose obligations on firms and individuals to report suspicions of money laundering or terrorist financing.
One of the most famous money laundering cases of recent times followed the collapse of energy producer Enron in 2001. A number of Enron's directors received lengthy jail sentences for making false statements about Enron's finances. Thousands of staff lost their jobs and pension investments as a result of the money laundering case.
The new regulations will provide more detailed obligations regarding customer due diligence, for example, explicit requirements for firms to undertake ongoing monitoring of business relationships and for firms to identify not only the customer, but also the beneficial owner of the customer. Firms will also be required to take enhanced customer due diligence measures in higher risk situations, whilst being allowed to reduce identification measures for specific situations with a lower risk of money laundering.
50 per cent of law firms surveyed by legal information providers Lexis Nexis, believe the new regulations will alleviate the business risk of being exposed to the threat of financial crime and money laundering, which is reassuring for business owners. The survey also found that 68 per cent of law firms have started to invest in training resources to bring staff up to speed with the changes to regulations and that 48 per cent have started to invest in personnel to perform the additional due diligence checks.
However, the survey also concluded that 52 per cent believe the new regulations will require additional investment as due diligence costs could increase by between 10 - 29 per cent, a cost, which may be passed on to the client.
Businesses who think they might be affected by the new regulations should contact their money laundering supervisor as soon as possible as they may have to register and pay a fee. There will be civil and criminal penalties for firms who don't register when they should, and for other offences or failures to comply with the rules.
If you need advice on implementing the Money Laundering Regulations, contact Paul Schofield on 01254 272 305 or Contact Us
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