On 14 January 2021, the Joint Money Laundering Steering Group (JMLSG) issued a note concerning the impact of the end of the Brexit transition period on its guidance.
The note explains that the JMLSG guidance is based on The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) (as amended) and that certain provisions in the MLRs were derived from EU law. The note states that there are still some references in the JMLSG’S guidance based on the premise of the UK’s membership of the EU and therefore are no longer appropriate and will be amended in due course.
The note refers to the following areas of the JMLSG guidance that are affected:
- The definition of a ‘third country’ has become a country other than the UK, as opposed to outside the European Economic Area (EEA). EEA entities are therefore third country entities for the purposes of anti-money laundering.
- Part III Section 1: The same level of information is to be provided by UK Payment Service Providers (PSPs), regardless of whether funds are being transferred to/from EEA countries or any other third country. UK PSPs should take into account relevant legislative changes, including The Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2019, when ensuring that complete payer and payee information accompanies all outbound wire transfers and when detecting non-compliant incoming wire transfers.
- Specific references to observing European Supervisory Authority guidelines within the guidance are no longer appropriate.
- The end of the Brexit transition period has not in itself increased the inherent anti-money laundering / countering the financing of terrorism (AML/CTF) risks. With regard to correspondent relationships involving the execution of payments, firms should take cognisance of the effectiveness of the AML/CTF regime of any third country when determining the extent of the enhanced due diligence measures to apply to respondents in that country.