Background
The government remains committed to the principle that the Money Laundering Regulations should set out a framework of obligations to maintain systems and controls, with the representatives of the regulated sector determining how these systems can best be set in place. We intend that the JMLSG, the professional associations and other industry bodies will continue to control the content of guidance notes interpreting the Regulations in the context of their particular business or profession. However, recent changes in anti money laundering legislation, and in the structure of the UK's anti money laundering regime, argue for a more coordinated approach to the issuing of such guidance.
The main impetus stems from the recommendation of the Cruickshank Report that consumer representatives should have an opportunity to feed in their concerns, but other factors include:
Procedure
Outline
Guidance notes will be written by the appropriate industry representative body and agreed within the membership. This can be done in consultation with government and law enforcement as required/appropriate. The notes will then be circulated for discussion in the MLAC, so that all main stakeholders, including consumers, have an opportunity to raise any concerns. We would encourage members of the Committee to seek views from their constituents. The MLAC may comment on the text, seek changes in dialogue with industry bodies, and make recommendations to ministers. Once the final text has emerged from this process, it will receive approval from a Treasury minister prior to publication.
Grandfathering of existing guidance
We expect the Proceeds of Crime Bill to reach Royal Assent this summer, and would hope for any guidance submitted to the Treasury to be signed off by Ministers before enactment. In order to facilitate this process, we intend to grandfather in all existing notes, including those issued by the JMLSG, the Law Society, the ICAEW and Lloyds. Provided that the Committee is content with this approach, and has no major concerns with the guidance notes as they stand, we will proceed to seek Minister's approval for the whole body of guidance.
Drafting of guidance on the test of "reasonable grounds".
Industry representatives will also want to draft guidance explaining how the new test of "reasonable grounds to suspect" is likely to be interpreted by a court, and illustrate this with industry-specific typologies on the circumstances in which it would be reasonable to form suspicions of money laundering. Any such guidance should be submitted to the Treasury as soon as possible. It can then be circulated to MLAC members by email, finalised and approved by the time the Proceeds of Crime Bill comes into force in July.
The JMLSG has already produced draft guidance for its members, and we invite them to consider sending it to the Committee for comments at this meeting. We hope that other industry associations that wish to have their guidance approved by HMT will do likewise. However, we are aware that the final text of such guidance may have to be changed following amendments to the Bill in the House of Lords, and so any discussion in the meeting will have to be provisional, and subject to any further comments in correspondence subsequently. We hope, nonetheless, to provide members with an opportunity to raise general issues on what should be covered in these aspects of guidance.
QUESTIONS
1) Do you agree that existing guidance notes should be grandfathered in?
2) Do you have any concerns with the existing guidance?
3) Do you agree with the proposed procedure for drafting guidance on the Proceeds of Crime Bill?