The United Kingdom has published a near final regulation, the Money Laundering and Transfer of Funds (Information on the Payer) Regulations 2017 (the “Regulation”) under the E.U. Fourth Money Laundering Directive, to replace the Money Laundering Regulations 2007. The Regulation is due to go into effect on June 26, 2017, although it may be delayed. Under the new Regulation, much of the U.K. anti-money laundering regime applicable to financial institutions (including, without limitation, banks and other credit institutions, other financial institutions such as investment services firms, investment managers, insurance companies, loan and mortgage companies and money service businesses, auditors and bankruptcy professionals, and independent financial professionals) will stay intact, but there are a number of changes, some of which may be material.
- As before, a risk assessment must be carried out and documented by each covered firm, but the Treasury and Home Office, and each supervisory authority, must also conduct a general risk assessment and the firm’s assessment must be consistent with those assessments.
- A Board level responsible officer must now be appointed, in addition to a responsible anti-money laundering officer at the firm level currently required.
- U.K. parent company policies and procedures must now apply to subsidiaries and branches inside and outside the European Union.
- Customer due diligence (“CDD”) must be carried out on existing customers in certain specified cases. The covered person must verify that a person who purports “to act on behalf of a customer” is in fact doing so and get information on the person’s identity and verify it. Obtaining information on beneficial owners is broadened and made more specific, including the owners of U.K. trusts. There is no longer a specified category of simplified due diligence (“SDD”), but rather the extent of CDD must be determined on a case-by-case basis, taking into account the firm’s risk assessment.
- As before, enhanced due diligence (“EDD”) may be required, but now the criteria for deciding are set forth in detail.