Government publishes consultation on changes to Money Laundering Regulations 2007
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Issued on 07 June 2011
The Government is publishing today its response to its review
of the Money Laundering Regulations and proposals for improvement.
The proposals follow a Government review of the regulations,
with engagement from more than 250 stakeholders, which found that the
regulations and their implementation are broadly effective and
proportionate, but that improvements could be made.
The Government’s proposals are intended to give businesses
greater confidence to focus compliance on their highest risk areas and
to discourage the tick-box approach taken by some businesses. They
support the plan to reduce the burden of regulation on British
businesses, as set out in the Plan for Growth. The Government
welcomes views on the following proposals:
- The removal of over two dozen criminal penalties for
businesses which fail to have the appropriate systems and controls in
place to combat money laundering. This would allow businesses to
implement a fully risk-based approach, where businesses make their own
assessment of the risks they face and implement appropriate systems and
controls. Civil penalties will remain and the Government will be
consulting on whether regulators should have the power to impose
additional penalties.
- A general exclusion for very small businesses (for example
those with below £13,000 VAT-exclusive turnover per annum), or a
reduction in the requirements placed on such businesses.
The Money Laundering Regulations 2007 require regulated
businesses to have appropriate systems and controls in place to
identify and verify the identity of their customers and carry out
ongoing monitoring as appropriate.
This consultation will not affect the criminal penalties for
money laundering under the Proceeds of Crime Act 2002 or the
obligations of firms to report suspicious activity to SOCA.
A full list of consultation questions is available in the
review. The consultation closes on 30 August 2011.
The Commercial Secretary, Lord Sassoon, said:
“It is essential that the UK’s money
laundering regulations make the UK a hostile environment for money
laundering and terrorist finance. But improvements can be made and we
must consider the impact of these regulations on British business.
We believe that we can make the
regulations more effective and proportionate by removing a range of
criminal penalties on all businesses and by lifting the burdens on the
smallest businesses. This will modestly reduce the burden on business,
without damaging the fight against money laundering.”
Notes
1. The consultation
document and the response to consultation can be found on this
website: Government
response to its review of the Money Laundering Regulations
2. The Money
Laundering Regulations 2007, require regulated businesses to have
appropriate systems and controls in place to identify and verify the
identity of their customers and carry out ongoing monitoring as
appropriate, based on their own assessment of the risk from money
laundering and terrorist finance.
The Regulations
currently contain criminal penalties that mean, in theory, responsible
individuals within firms could face prosecution if they fail to have
adequate systems in place.
While these
criminal penalties have rarely, if ever, been used, there is evidence
that their existence may deter firms from taking a risk-based approach,
for fear of getting it wrong and facing prosecution.
This consultation
will not affect the criminal penalties for money laundering under the
Proceeds of Crime Act 2002 or the obligations of firms to report
suspicious activity to SOCA.
3. The
Government’s approach to money laundering regulation is designed to
make the UK financial system a hostile environment for money laundering
and terrorist finance, while minimising the regulatory burden imposed
on UK businesses.
The objective of
the review was to assess the extent to which the implementation of the
Money Laundering Regulations 2007 reflects the principles of
effectiveness, proportionality and engagement. The Government’s
proposals aim to strengthen the risk-based approach, which is designed
to give businesses the confidence to adopt policies and procedures that
reflect their own assessment of risk.
4. An
impact assessment of the changes proposed is also being published.
Businesses, supervisors, law enforcement and others are asked to review
and provide information on the costs and benefits of these changes, to
inform robust analysis and to help determine whether the proposed
changes will make the regulations more effective and proportionate.
5. The
general de minimis limit for those businesses with less than €15,000
VAT-exclusive turnover per annum (The press notice refers to the
approximate equivalent amount in Sterling), is suggested in the
consultation in order to prompt discussion of this and other ideas
about whether and how to define those operating at such a low level
that they could be judged not to be in business for the purposes of the
Money Laundering Regulations.
It is based on
existing limits in the Regulations for specific activity and comes from
the EU 3rd Money Laundering Directive.
6. The
consultation closes on 30 August 2011.Responses should be sent to
mlr.review@hmtreasury.gsi.gov.uk or to Review of the Money Laundering
Regulations, 3/15, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.
About the Author
© Crown Copyright. Material taken from HM-Treasury.
Reproduced under the terms and conditions of the Click-Use Licence.
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Article Published/Sorted/Amended on Scopulus 2011-06-09 11:27:35 in Legal Articles
