Amendments to the MLRs 2017 Statutory Instrument 2022
What has happened?
In July 2021, HM Treasury issued the Amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 Statutory Instrument 2022 Consultation. The consultation is taking place in order to make some time-sensitive updates to the MLRs, which are required to ensure that the UK continues to meet international standards, whilst also strengthening and ensuring clarity on how the AML regime operates. It will be open until 14 October 2021. Some key elements of the consultation are noted below.
What do you need to do?
Account Information Service Providers and Payment Initiation Service Providers
The European Banking Authority published updated guidelines on money laundering and terrorist financing risk factors in March 2021, which noted that the inherent ML/TF risk in AIS and PIS is limited. The Government is seeking views on the possibility of excluding AISPs from the regulated sector, given that the likely risk of ML/TF has been assessed as low. It also welcomes views on PISPs, and the inherent risks present in PIS but note the potential higher risk relative to AIS may suggest maintaining PISPs within the regulated sector. Any exclusion of AISP or PISP from the regulated sector would apply specifically to the carrying out of account information or payment initiation services. AISPs or PISPs which undertake other regulated activity in the MLRs would still be required to maintain appropriate policies, controls, and procedures for that activity. This would not change the requirement for firms to register or become authorised by the FCA under the PSRs.
Suspicious Activity Reports
The consultation is seeking views on whether it is useful or necessary for supervisors to collect and view the content of SARs.
Proliferation Financing Risk Assessment
In October 2020, the FATF adopted amendments to its international standards to require countries and the private sector to identify, and assess the risks of potential breaches, non-implementation or evasion of the targeted financial sanctions related to proliferation financing (PF)1, as contained in FATF Recommendation 7 and to take action to mitigate these risks, as well as to enhance domestic co-ordination. This change should be reflected in legislation to ensure the UK meets international standards.
1 This FATF requirement relates solely to the risk of breaches of relevant United Nations Security Council Resolutions applying targeted financial sanctions relating to the financing of proliferation of weapons of mass destruction.
Expansion of Regulation 30A to introduce an ongoing requirement to report discrepancies in beneficial ownership information
The Government is seeking views through the consultation on whether to align the beneficial ownership discrepancy reporting obligation (i.e. the requirement for relevant persons to report to the Registrar of Companies any discrepancies between the information they hold about the beneficial owners of companies, as a result of CDD measures, and the information recorded by Companies House on the public companies register) to the ongoing obligation on relevant persons to carry out CDD on the beneficial ownership of their clients.
FCA information gathering powers – Annex 1 financial institutions
This section of the consultation seeks views on the FCA’s information gathering powers over Annex 1 (non-FSMA regulated) financial institutions. These institutions perform activities such as renting out safe deposit boxes and commercial lending.
The FCA’s current powers to require information from Annex 1 institutions are granted by Regulation 66 of the MLRs. This is a power to request information reasonably required in connection with supervisory functions with notice and giving reasons. Notices under Regulation 66 are currently determined on a case-by-case basis. However, the FCA has indicated that it would find the giving of notices in order to require regular reporting by a group/sub-group of Annex 1 institutions prohibitively cumbersome and costly. It is therefore seeking more flexible information-gathering powers to use across its supervised population.
How can we help you?
If you’d like to know more about how we can help you with your AML arrangements, or with any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.