Shearman & Sterling LLP | FinReg | UK Legislation Published to Onshore Anti-Money Laundering and Counter-Terrorism Financing Legislation for Brexit
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  • UK Legislation Published to Onshore Anti-Money Laundering and Counter-Terrorism Financing Legislation for Brexit
    HM Treasury has published a draft of the Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018, along with explanatory information. The draft Regulations will primarily be relevant for payment service providers, anti-money laundering/counter-terrorism financing supervisory authorities and firms that are regulated through the U.K.'s AML/CTF regime. The draft Regulations introduce no material policy changes. Their purpose is to correct deficiencies in U.K. law and retained EU law to ensure that the U.K. AML/CTF regime continues to function effectively after the U.K.'s withdrawal from the EU.

    The draft Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLRs), which transposed into U.K. law the provisions of the EU Fourth Money Laundering Directive (4MLD). The draft Regulations also amend the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 and the revised EU Funds Transfer Regulation (Regulation (EU) 2015/847). This EU Regulation gives legal effect to Financial Action Task Force Recommendation 16, on the information accompanying electronic transfers of funds. Additionally, the draft Regulations revoke Commission Delegated Regulation (EU) 2018/1108, which sets out Regulatory Technical Standards for central contact points under 4MLD.

    The amendments include:
    • removal of obligations on U.K. Persons to have regard to guidelines issued by the European Supervisory Authorities;
    • removal of 4MLD-derived requirements in the MLRs to communicate certain information to EU institutions and other EEA member states;
    • adjustments to require U.K. credit and financial institutions engaged in correspondent banking relationships to apply enhanced due diligence whether the relationship exists with an EEA institution or a non-EEA third-country institution;
    • empowering the Financial Conduct Authority to make technical standards imposing additional measures in cases where credit or financial institutions have branches or subsidiaries outside the U.K. in jurisdictions that do not permit implementation of group-wide policies and procedures at least as strong as those required by the MLRs.

    HM Treasury intends to lay the draft Regulations before Parliament before exit day and the Regulations will enter into force on exit day.

    View the draft Regulations.

    View the explanatory information.

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