Review of the UK’S anti-money laundering regime examining aspects which make it less effective whilst imposing unnecessary burdens
The Cutting Red Tape review of the UK’S Anti-Money laundering and Counter Financing of Terrorism Regime is a government review led by BEIS. The review team worked with other government departments and regulators to identify aspects of the supervisory regime which make it less effective and impose unnecessary burdens on legitimate, law-abiding businesses.
This Review is seeking evidence of the impact on business of the current anti-money laundering and terrorist finance regime, and specifically the role of supervisors in that regime. The aim is to examine the potential to improve compliance and efficiency, by identifying aspects of the supervisory regime that appear to businesses in the regulated sector to be unclear, unnecessarily cumbersome, conflicting or confusing.
The Government’s domestic objective on anti-money laundering and terrorist financing is to protect the integrity and stability of the financial system, through effective and proportionate anti-
money laundering, counter-terrorist and proliferation finance measures.
The government will not abrogate its international commitments and EU obligations as a result of the review. UK legislation generally follows on from EU Directives, the most recent of which was published in June this year, and which the UK now intends to bring into domestic law through updated money laundering regulations by June 2017. EU Directives seek to give effect to the Financial Action Taskforce Global standards on anti-money laundering and terrorist financing, and set out that banks, financial institutions and other businesses should carry out appropriate due diligence focused on where risk is greatest.The Government’s clear policy is that businesses’ approach to money laundering and terrorist financing should be risk-based. This means that businesses are expected to form their own judgment of where the risks fall in a given case and how best to comply with the relevant legislation and sectoral guidance. This is the clear position of the international and EU community and is not open to review. However, the team would be interested to receive evidence on how implementation of this policy in practice might be improved.
The Review will seek evidence in relation to the role of all supervisors in the implementation of the current Money Laundering Regulations (2007). It will seek to identify any aspects of regulatory activity that could be made more efficient - both for those that operate the regime and are subject to it and for enforcing authorities. In seeking evidence of the impacts on business of meeting their regulatory obligations, this includes impacts:
- on banks, financial institutions and other businesses that are affected directly by the regime; and
- on businesses who in their turn are asked to comply with the anti-money laundering requirements of those banks and financial and other businesses.
The review is seeking evidence of ineffective requirements imposed on business through legislation or its implementation. In respect of the law, the key legislative provisions are listed below.
- In respect of supervision, implementation and enforcement by authorities, the review is seeking evidence of the impact on businesses, for example:
- The effectiveness and proportionality of the supervisors’ approach to supervision and enforcement, and how could this be improved, specifically in relation to the bodies listed below
- How and where businesses access information about their compliance, and how effective and proportionate is AML/CTF guidance (for example FCA and JMLSG guidance).
- Evidence of over-implementation (given that due diligence on customers should be proportionate to the risks posed), and on the range of tools to address this and how are they used
- Whether self-regulation supports an effective and proportionate AML/CTF regime
- Good practice examples of activity or approaches taken by supervisors to support business compliance, which could be replicated elsewhere
- Evidence of the supervisory regimes in other countries that we can learn from, or that impacts on businesses in the UK
Evidence gathered by the review will be shared with relevant Government Departments, authorities and regulators (although businesses may request to have their evidence shared on an anonymous basis). Relevant findings from this exercise will be fed into the analysis of responses received through other forthcoming consultations such as that due later in the year on the implementation of the 4th EU Money Laundering Directive and the Regulation on information accompanying transfers of funds.
Any issues concerning the regulation of systemic financial risk fall outside the scope of the review. This review will not cover the burdens associated with the requirement to report suspicious activity to the National Crime Agency through the Suspicious Activity Report regime.
The following are a series of links to key pieces of legislation, guidance and policy documents
- Directive (EU) 2015/849 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (4th AML directive)
- The Money Laundering Regulations 2007 [on Gov.uk]
- Regulation (EU) 2015/847 on information accompanying transfers of funds (the Wire Transfer Regulations)
- The FCA issued reviewed guidance on anti-money laundering in April 2015
- Publication on preventing money laundering [on Gov.uk]
- Treasury approved guidance on money laundering regulations
- Business tax guidance on money laundering regulations [on Gov.uk]
- Law Society risk compliance guidance on anti money laundering
- ICAEW guidance on money laundering regulations
- Gambling Commission guidance on prevention of money laundering
- Money Laundering Regulations 2007 for insolvency practitioners [on Gov.uk]