UK Government Consults on Targeted Amendments to the Money Laundering Regulations07/22/2021The U.K. government has opened a consultation on proposed targeted changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, referred to as the MLRs. The consultation focuses on the time-sensitive changes that are needed to ensure that the U.K. requirements meet international standards set by the Financial Action Task Force and to strengthen the overall requirements. The government has also opened a call for evidence on the U.K.’s anti-money laundering and counter terrorist financing regulatory and supervisory regime, which is considering the overall effectiveness and extent of the regime, whether key elements operate as intended, and the structure of the supervisory regime. Responses to the MLRs’ consultation may be submitted until October 14, 2021. These MLR amendments will be implemented through secondary legislation due to be laid in Spring 2022.
The government is seeking feedback on proposed changes to the MLRs, including:
- Amending the scope of the MLRs to exempt account information service providers, payment initiation service providers, bill payment service providers, and telecom, digital and IT payment service providers on the basis that their activities pose low AML/CTF risks.
- Implementing the FATF requirement that cryptoassets be subject to the funds transfer requirements by applying those to cryptoasset exchange providers and custodian wallet providers carrying on business in the U.K. These changes will be implemented through the MLRs instead of the U.K.’s onshored Funds Transfer Regulation because primary legislation would be needed to amend the FTRs. However, provisions of the FTR will be replicated in the MLRs. Firms will be given time to operationalize compliance with these requirements. The government is also seeking views on adjusting the scope of the FTR obligations for cryptoasset exchange providers and custodian wallet providers.
- Explicitly allowing AML/CTF supervisors to have a right, on request, to view the content of a suspicious activity report submitted by the firms and individuals supervised by them.
- Aligning the activities that make an entity a credit or financial institution under the MLRs with those under the Financial Services and Markets Act 2000 and the Regulated Activities Order.
- Expanding the requirements to include requirements on proliferation of financing for Virtual Asset Service Providers and adding the FATF’s definition of proliferation of financing.
- Extending the terms “Trust or Company Service Provider” and “business relationship” to include all forms of business arrangement required to register with Companies House, including limited partnerships.
- Improving the effectiveness of the MLRs as an intelligence and information sharing gateway and expanding the list of “relevant authorities” to include other government agencies, such as Companies House, to use the gateway for the protected sharing of information and intelligence relevant to MLR functions.
View the consultation on the MLRs.
View details of the AML/CTF call for evidence.
Financial Regulatory Developments Focus