The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLR 2017) and its amendments is the primary piece of UK legislation designed to combat money laundering and terrorist financing. The regulations apply to various businesses, including banks, financial institutions, and professional services providers, such as lawyers and accountants.
The key requirements of the regulations include:Â
Customer Due Diligence (CDD): Businesses must carry out CDD checks on their customers to identify and verify their identity, as well as assess the risk of money laundering and terrorist financing.Â
Risk-based approach: Businesses must conduct a risk assessment to identify and assess the risk of money laundering and terrorist financing that they may be exposed to. Taking a risk-based approach ensures that any risks are assessed in line with their severity and resources are allocated to mitigate these appropriately.
Record-keeping: Businesses must keep records of all CDD checks and transactions. You need to keep a record of all customer due diligence measures carried out, including: customer identification documents obtained, risk assessments, policies, controls and procedures, and training records.
Reporting suspicious activity: Businesses must report any suspicious activity to the relevant authorities, such as the National Crime Agency, and must not tip off the customer.
Training and awareness: Businesses must raise awareness and provide training to their staff on the risks of money laundering and terrorist financing.
Sanctions compliance: Businesses must comply with all financial sanctions imposed by the UK government and the European Union.Â
The regulations aim to improve the effectiveness of the UK’s anti-money laundering and counter-terrorist financing framework by enhancing transparency, strengthening the risk-based approach, and increasing cooperation between businesses, law enforcement, and regulatory authorities.
The Financial Services and Markets Act 2000 (FSMA) regulates financial services and markets in the United Kingdom.
It established the Financial Services Authority (FSA) as the regulator for financial services and markets. The FSA was later replaced with the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The FSMA aims to protect consumers, maintain market confidence, and promote competition in the financial services industry. It also provides a framework for regulating financial services and markets in the UK, including setting standards for conduct and ensuring that firms are adequately funded and managed.
The act covers a wide range of financial products and services, including investments, banking, insurance, and mortgages. It also includes provisions for the regulation of market abuse, insider trading, and other types of financial misconduct.
The Proceeds of Crime Act 2002 (POCA) is a UK law that provides a framework for recovering the proceeds of criminal activity. It aims to prevent criminals from benefiting from their crimes by allowing law enforcement agencies to seize and confiscate assets that have been obtained through illegal methods.
Under POCA, law enforcement can obtain court orders to freeze, seize, and forfeit assets that are suspected of being obtained through criminal activity. This includes money, property, and other assets that have been acquired either directly or indirectly through criminal proceeds.
The act also includes provisions for investigating and prosecuting money laundering. It sets out the requirements for businesses and individuals to report suspicious transactions to the authorities and establishes criminal penalties for those who fail to comply.
The POCA is an important tool in the fight against financial crime, as it helps to disrupt the financial networks of criminal organisations and reduce the incentives for committing crimes.