Improving the effectiveness of the Money Laundering Regulations

HM Treasury's consultation, 'Improving the effectiveness of the Money Laundering Regulations' explores a wide range of steps for improving the quality of Anti-Money Laundering (AML) due diligence as well as filling gaps in disclosure of trust and land ownership as well as joining up gaps in information sharing. It also includes a survey.

The Money Laundering Regulations 2017 (MLRs) place requirements on a range of businesses to prevent money laundering (ML) and terrorist financing (TF).

The consultation covers four core themes:

1. Making customer due diligence more proportionate and effective.

2. Strengthening system coordination.

3. Providing clarity on the scope of the MLRs.

4. Reforming registration requirements for the Trust Registration Service.

Chapter 1 focuses on the Customer Due Diligence (CDD) requirements in the MLRs, including enhanced and simplified checks. The chapter considers:

  • Whether the triggers for due diligence are sufficiently appropriate and clear, particularly for regulated firms that are not in the financial sector.
  • Whether clarity can be provided to regulated firms on when to carry out ‘source of funds’ checks.
  • Whether the requirement to verify anyone ‘acting on behalf of’ a customer is clear enough.
  • How best to support the use of digital identity when verifying customer identity.
  • Ways to support firms’ approach to the timing of CDD in cases of bank insolvency.
  • When Enhanced Due Diligence checks (EDD) should be required.
  • If changes could be made to improve the proportionality and effectiveness of EDD in relation to High-Risk Third Countries (HRTC).
  • What steps could be taken to improve access to Pooled Client Accounts for unregulated firms?

Chapter 2 explores issues that are intended to strengthen system coordination across the UK’s AML/CTF regime. The proposed changes in this chapter reflect in part the need to update the MLRs, to ensure continuing effective cooperation as the system evolves to take account of new and emerging threats, technological change and changes in the legislative landscape such as the Economic Crime and Corporate Transparency Act 2023.

Chapter 2 also builds on the actions on this theme being taken forward as part of the Economic Crime Plan 2023-26 including commitments relating to system prioritisation. This chapter considers:

  • Ways to ensure that key information sharing and collaboration gateways are open and useful.
  • Whether Companies House should be added to the list of bodies with whom AML supervisors must cooperate.
  • How regulated firms should use the National Risk Assessment of Money Laundering and Terrorist Financing (NRA) to help target their compliance work.

Chapter 3 explores issues that relate to the boundary of the AML/CTF regulation regime. This boundary and the guidance that supports firms and supervisors to comply with the regime needs to be kept updated, to keep pace with wider regulatory and market changes, following the UK’s exit from the EU. This chapter considers:

  • How the thresholds in the MLRs which are currently listed in euros could be changed to sterling.
  • Potential gaps in the regulation of Trust Company and Service Providers (TCSPs).
  • How best to align registration and Change in Control (CiC) measures for custodial wallet providers and cryptoasset exchange providers between the Financial Services and Markets Act 2000 and the MLRs.

Chapter 4 considers a range of potential changes to the registration requirements for the Trust Registration Service (TRS), which are given effect in the MLRs. The proposed amendments are intended to increase transparency to certain higher-risk trusts whilst reducing administrative burdens on low-risk trusts.

Chapter 4 sets out proposals for the TRS:

  • Include the registration of non-UK trusts, with no UK trustees that acquired UK land before 6th October 2020.
  • Simplify trust registration for estates management by aligning deadlines for certain trusts and removing the requirement to register from Scottish Survivorship Trusts.
  • Introduce a de minimis for low-risk non-taxable trusts to reduce administrative burdens.

There is also a survey for members

HMRC Treasury is also keen to receive responses from a wide range of regulated businesses, including large firms, SMEs and sole traders. See the survey at the Cost of Compliance with the Money Laundering Regulations - survey for regulated businesses.

Workshops: There are also workshops running for the duration of the consultation. Follow the HM Treasury link at the end.

The consultation closes on 9 June 2024.

Useful guides on this topic

AML: Anti-Money Laundering glossary
Do you know your ASP from your EAB? Do you have a PBS or are you a BOOM? Anti-Money Laundering (AML) guidance loves an abbreviation. Here is a useful list.

AML Zone: Anti-Money Laundering tools for you
AML Zone contains checklists and practical guidance on the Anti-Money Laundering requirements that businesses need to follow.

You can also watch our Anti-Money Laundering Update and Compliance course on demand.

External links

HM Treasury Improving the Effectiveness of the Money Laundering Regulations