Introduction: Overview of anti-money laundering and counter terrorist financing regime
The European Union’s 4th Money Laundering Directive introduced a number of changes to measures already in place to tackle money laundering. This resulted in the introduction of the Money Laundering Regulations, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Under the new Regulations, we remain the supervisory authority for Money Service Businesses (MSBs) and High Value Dealers (HVDs) , Trust or Company Service Providers (TCSPs), Accountancy Service Providers (ASPs) and Estate Agency Businesses (EABs), Bill Payment Service Providers (BPSP) and Telecommunication, Digital and IT Payment Service Provider (ITDPSP). The FCA and a number of professional bodies are also supervisors for ASPs ,TCSPs and EABs.
We rely on businesses to put in place risk sensitive anti-money laundering policies and procedures to prevent their businesses from being used by money launderers and terrorists and to identify and report suspicious activity to the National Crime Agency (NCA).
Our aim is to work with businesses to help them with this important task.
We will do this by helping them to understand the Regulations, encouraging them to comply with Regulations and making them aware of any simplified procedures and making sure they use them.
The Regulations say that a business must put in place risk-sensitive anti money laundering policies and procedures and that many of the customer due diligence checks must be done on a “risk sensitive basis”. This requires the adoption of a risk-based approach, as recommended by the 3rd and 4th Directives.
HMRC will apply a risk-based approach to supervision by using information from different sources to help us decide where to focus our resources and which businesses we will visit to check and improve their compliance with the Regulations.
Regulation 76 of the Regulations allows us to impose a penalty “of such amount as we consider appropriate”. Full details about the way HMRC determine what is an appropriate penalty can be found in our penalties guidance MLR1. The guidance on enforcement measures is at https://www.gov.uk/government/publications/money-laundering-supervision-enforcement-measures
The basic purposes of the Regulations and our anti-money laundering and counter terrorist financing regime are summarised below:
- To provide a disincentive to crime
- To aid the detection and prosecution of crime
- To protect the integrity of the financial system and reputation of UK business
- To avoid economic and competitive distortions
- To avoid the economic damage of corruption