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29 September 2006 

HM Treasury is consulting on a review of the regulatory regime for Money Service Businesses.

In 2001, the UK Government introduced a new supervisory regime for Money Service Businesses (MSBs) to combat money laundering and terrorist finance in the sector.  The government committed at the time to review the arrangements after a few years of operation and, as part of this exercise, a consultation has been launched to allow industry stakeholders in the MSB sector to inform the review's work. 

The consultation outlines a package of proposals to help reduce the harm caused by crime and terrorism by combating abuse of MSBs and by shifting the burden of supervision onto firms that pose the highest risk. The proposals are to:   

  • prevent criminal entry into the sector (and enable the extraction of criminal elements already in the sector) by replacing the registration system with a licensing system;
  • adopt a more risk-based and intelligence-led approach to assurance and enforcement visits by the supervisor, focussing attention on the highest risk operators;
  • require financial records to be maintained in a consistent form, and in English to establish actionable audit trails for investigators;
  • strengthen the sector's compliance culture and improving compliance with existing and forthcoming money laundering and terrorist finance requirements through;
  • enhanced guidance for, and engagement with, the sector;
  • robustly tackle serious or persistent non-compliance among MSBs including through prosecution.

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