Anti-Money Laundering (AML) regulations are crucial for firms and the broader financial system for several important reasons. First and foremost for preventing criminal activities: AML regulations are designed to prevent businesses from being unknowingly involved in money laundering, terrorist financing, and other illegal financial activities.
By implementing AML measures, firms contribute to the global fight against financial crime and help prevent the movement of funds derived from criminal activities. Non-compliance can also result in significant legal and financial penalties, as well as potential criminal charges. AML regulations ensure that firms meet their legal obligations and avoid potential legal repercussions.
Protecting reputation is another key benefit. By adhering to AML regulations, firms demonstrate their commitment to ethical business practices and safeguard their reputation in the eyes of customers, partners, and regulators. Implementing AML measures helps firms identify and manage risks associated with money laundering and terrorist financing. By conducting thorough due diligence on customers and transactions, firms can better assess the potential risks involved in their business relationships.
Who must firms register with?
As of September 2021, the UK’s anti-money laundering (AML) regulations require certain types of businesses and individuals to register and be supervised for AML purposes. The specific regulatory bodies responsible for supervising these businesses may vary depending on the sector. It is important to note that regulations are continuously changing, so it’s important to refer to the most up-to-date sources for accurate information.
All businesses falling under these regulations need oversight from a supervisory body. A business might already be under supervision, possibly due to authorisation from the Financial Conduct Authority (FCA) or affiliation with a professional organisation such as the Law Society. If you are being supervised by the FCA or a recognised professional body like the Association of Chartered Certified Accountants, there is no requirement for you to register with HMRC.
Here is an outline of the different types of businesses that may need to register for AML purposes and the potential supervisory bodies they might fall under:
Financial institutions and credit institutions: Businesses such as banks, building societies, credit unions, and mortgage brokers may fall under the supervision of the Financial Conduct Authority (FCA).
Cryptocurrency businesses: Firms engaged in activities related to cryptocurrencies and virtual assets may be supervised by the FCA.
Money service businesses (MSBs): MSBs, which include money transmitters, currency exchange providers, and check cashers, may be supervised by HM Revenue and Customs (HMRC).
Trust or company service providers (TCSPs): Businesses providing services related to trusts, company formation, and company administration might be supervised by HMRC or other professional bodies.
Estate agents: Estate agents who engage in certain high-value transactions may need to register and could be supervised by HMRC.
High-value dealers: Businesses dealing in high-value goods, such as precious metals, jewels, and art, might be subject to supervision by HMRC.
Accountancy and legal professionals: Certain professionals, such as accountants and solicitors, may be supervised by their respective professional bodies, such as the Association of Chartered Certified Accountants (ACCA) or the Solicitors Regulation Authority (SRA).
Casinos and gambling operators: Casinos and businesses within the gambling sector may be supervised by the Gambling Commission.
Letting agents: Letting agents involved in high-value property rentals could be supervised by HMRC.
Art market participants: Art dealers and galleries involved in transactions involving high-value artwork may have reporting obligations and could be supervised by HMRC.
Tax advisers: Tax advisers might be supervised by HMRC or their relevant professional bodies.
Keep in mind that there may be other businesses or individuals that fall under AML regulations and different supervisory bodies. Regulations and supervisory arrangements can change, so it’s essential to consult the latest guidance and regulations from official government sources to ensure compliance.