Money Laundering and Terrorist Financing (Amendment) Regulations 2019
The Government has published new secondary legislation aimed at updating existing anti-money laundering legislation.
Money Laundering and Terrorist Financing (Amendment) Regulations 2019
INTRODUCTION
The regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds Regulation from 2017, and would implement an EU Directive on the topic.
The regulation makes additional provisions to cover crypto-asset exchange providers in its definitions of credit institutions, as well as for letting agencies and estate agents. These will now be covered under anti-money laundering and counter-terrorist financing (‘AML’/ ‘CTF’) legislation.
The regulation will come into force in three phases:
10th January 2020, except for the following –
- Customer due diligence: anonymous prepaid cards – comes into force on 10th July 2020
- Bank account portal – comes into force on 10th September 2020.
AMENDMENTS TO NOTE
New relevant persons
The definition of tax adviser is expanded to include those who offer material aid or assistance on tax matters.
- The scope of regulated businesses in the property agency sector is expanded to include the letting agency sector for high value transactions with a monthly rent of EUR 10,000 or more.
- Art market participants for transactions exceeding EUR 10,000, including art galleries, auction houses and freeport operators storing high-value art, are also brought into scope of the legislation. Freeports are areas designated as special zones for customs purposes, usually defined as a place to carry out business inside a country’s land border but where different customs rules apply.
- Cryptoasset exchange providers and custodian wallet providers are also brought into scope of the MLRs, to ensure the UK meets evolving global standards and fully addresses emerging risks.
Customer due diligence (‘CDD’) and enhanced due diligence
- Letting agency businesses must apply measures in relation to both the tenant and landlord for rental agreements with a monthly rent of EUR 10,000 or more.
- Art market participants must apply CDD measures when carrying out transactions equivalent to EUR 10,000 or more in relation to the sale of a work of art.
- CDD measures must also be carried out by cryptoasset exchange providers and custodian wallet providers entering into a business relationship and in other specified cases in line with other relevant persons.
- Cryptoasset automated teller machine operators must also carry out CDD for all exchanges of money for cryptoassets, whatever the amount. The reason for this is that the government has seen evidence that CATMs could be used for illicit purposes, such that setting a value threshold could see repeat business or “smurfing” just below this threshold to circumvent CDD measures.
- The instrument introduces an explicit CDD requirement for relevant persons to take reasonable measures to understand the ownership and control structure of their customers. Secondly, to require relevant persons to take reasonable measures to verify the identity of senior managing officials when the beneficial owner of a body corporate cannot be identified.
- The use of electronic identification processes is permitted where these are: independent of the person whose identity is being verified, secure from fraud and misuse and capable of providing an appropriate level of assurance that the person claiming a particular identity is in fact the person with that identity.
Companies House
A new requirement for firms to report to Companies House discrepancies between the information the firm holds on their customers compared with the information held in the Companies House Register.
SUPPLEMENTARY ANTI MONEY LAUNDERING GUIDANCE FOR INSOLVENCY PRACTITIONERS
The insolvency appendix to the CCAB AML guidance is currently with HM Treasury for approval.
9 January 2020
**This technical alert is not to be a statement of law or a substitute for specific professional or legal advice**