Shearman & Sterling LLP | FinReg | UK Government Launches Review of UK’s Anti-Money Laundering and Counter Terrorist Financing Regime
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  • UK Government Launches Review of UK’s Anti-Money Laundering and Counter Terrorist Financing Regime

    The U.K. government has launched a review of the U.K.’s anti-money laundering and counter terrorist financing regulatory and supervisory regime with the publication of a call for evidence. The government is assessing the overall effectiveness and extent of the regime, whether key elements operate as intended, and the structure of the supervisory regime. On the same day, the government also published 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. That consultation is focused on the changes needed to ensure the U.K. regime meets international standards. Responses to the call for evidence may be submitted until October 14, 2021. A final report on the findings of the review and, where relevant, possible reform will be published no later than June 26, 2022, in line with the review requirement in the MLRs.

    The government is considering the overall effectiveness of the regime as well as specific elements, including:
    • risk-based decision making, reliance on due diligence and the supervisory expectations of a risk-based approach;
    • whether the MLRs impede the adoption of new technologies that could be used for combatting economic crime;
    • the potential for supervisors to be under a legal obligation to consider Suspicious Activity Reports and to assess their quality;
    • how well the gatekeeper regime is working, such that supervisors are able to stop bad actors from operating within the regulated sector; and
    • the usefulness of the existing guidance on how relevant firms and individuals can satisfy their MLR obligations and whether there are ways that the guidance might be improved.

    In addition, the call for evidence considers whether respective AML/CTF supervisors have adequate powers to supervise or monitor and ensure compliance with the AML/CTF requirements. The extent of the regime is also being considered in the MLR consultation, with proposals to extend the rules to exempt account information service providers, payment initiation service providers, bill payment service providers, and telecom, digital and IT payment service providers. In the call for evidence, HM Treasury is seeking input on whether the scope should be extended to other subsectors of the gambling industry, such as off-course betting shops and online betting, as well as antiques. The government is also asking for feedback on whether any other sectors should be included or excluded from the regime.

    Lastly, HM Treasury is requesting views on the supervisory regime, including the structure of the regime, its strengths and weaknesses, and possible gaps in supervision arising from the structure. The possibility of reforming the supervisory structure is floated, including consideration of consolidating the 25 existing supervisory bodies (which include 22 legal and accountancy professional bodies as well as three public sector bodies—the Financial Conduct Authority, Her Majesty’s Revenue and Customs, and the Gambling Commission) or establishing a single body with oversight of the entire regime.

    View HM Treasury’s AML/CTF call for evidence.

    View details of the consultation on the MLRs

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