On 20 December 2019, there was published on the legislation.gov.uk website, the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (the Regulations), together with an explanatory memorandum.
The Regulations are being made to amend the UK’s existing anti-money laundering and counter-terrorist financing (AML/CTF) legislation, namely the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), to implement changes made by the Fifth Money Laundering Directive into the UK.
The Regulations make the following changes:
- Regulations 3 and 4 expand the scope of regulated sectors to add new categories of ‘relevant person’. The definition of tax adviser is extended to those who offer material aid or assistance on tax matters. Additionally, letting agents, art market participants (including freeport operators), and providers of cryptoasset exchanges and custodian wallets all now fall under the scope of the new legislation. The UK government has decided to use the definition of “cryptoassets” rather than “virtual currency” as it captures all relevant activity involving all three types of cryptoassets under AML/CTF regulation, while limiting the scope of cryptoassets to those using distributed ledger technology;
- Regulation 4 makes new provisions addressing policies, controls and procedures for regulated businesses, as well as ensuring that relevant persons undertake risk assessments prior to the launch or use of new products, business practices and technologies. Parent companies must also have group-wide policies in place regarding the sharing of information about customers, customer accounts and transactions for AML/CTF purposes. Relevant persons must also take measures to ensure agents used for the purpose of regulated business receive AML/CTF training;
- Regulation 5 amends Part 3 of the MLR 2017 in relation to customer due diligence and enhanced due diligence measures to be carried out by relevant persons;
- Regulation 7 amends Part 6 of the MLR 2017 in relation to supervision, approval and registration by supervisory authorities. This includes a requirement on the FCA to maintain a register of providers, including providers of cryptoasset exchanges and custodian wallets. Other amendments permit the FCA and HMRC to publish information on directions issued to parent companies, or about the suspension or cancellation of a person’s registration under Part 6 of the MLR 2017;
- Regulation 8 amends Part 8 of the MLR 2017 in relation to information and investigation, conferring new powers on the FCA in relation to providers of cryptoasset exchanges and custodian wallets; and
- Regulation 9 amends Part 9 in relation to enforcement.
The Regulations come into force on 10 January 2020, except for Regulation 5(5)(c) on anonymous prepaid cards, which comes into force on 10 July 2020, and Regulation 6 and 12, which come into force on 10 September 2020.