The Fifth Money Laundering Directive ((EU) 2018/843) has now been implemented in the UK by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, which amends and extends the existing Money Laundering Regulations 2017.
The amended Regulations apply to businesses of all sizes, from global corporations to UK-based sole practitioners. The aim is to prevent the financial system of the UK and other member states of the European Union from being used for money laundering and for funding terrorist activities, by for example further enhancing transparency, limiting the anonymity related to virtual currencies and wallet providers and improving cooperation and information sharing between anti-money laundering supervisors.
So regardless of business size, all business should be aware of the new requirements, some of which feature below:
- Customer due diligence can be done by electronic means as long as it is secure from fraud and misuse and provides an appropriate level of assurance that the person claiming their identity is in fact that person
- Enhanced customer due diligence is now required for any business relationship or transaction where either of the parties is established in a high-risk third country (which is a country identified by the European Commission as such)
- Reasonable measures must be taken to ensure to properly understand a customer’s legal structure, chain of ownership and control structure
- Where the beneficial owners of a company cannot be identified, all reasonable measures must be taken to identify the senior managing official in the company. The steps undertaken must be recorded in writing
- Companies must have in place (maintain and update when required) policies, controls and procedures on data protection but also on the sharing of information about customers, customer accounts and transactions
- Virtual currency provides and custodian wallet providers, art traders (with transactions of EUR 10,000 or more), providers of services to auditors, external accountants and tax advisors as a principal business/professional activity and estate agents (where the monthly rent is EUR 10,000 or more) now all fall within the scope of the amended Regulations and therefore qualify as “relevant persons”
- The EU Financial Intelligence Units will now be able to acquire any information from a relevant person, without any suspicious transaction reports being made
For businesses worried about falling foul of the new regulations or for more information, please contact Isabelle Price, a solicitor in our Corporate, Governance and Banking team of Devonshires.