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HMRC internal manual

Money Laundering Regulations: Compliance

Legislation: MSBs carrying out Annexe 1 Financial Activities

Under the MLRs 2007 HMRC is responsible for the supervision of any annexe 1 financial activities when they are carried out by an MSB required to register with HMRC.

The Money Laundering Regulations 2007 refer to certain businesses as ‘Annexe 1 Financial Institutions’. This is because one of the definitions of ‘financial institution’ in the Third EU Money Laundering Directive refers to an undertaking, other than a credit institution, which carries out one or more of the operations included in points 2 to 12 and 14 of Annexe 1 to the Banking Consolidation Directive as listed in Schedule 1 MLR 2007.

All annexe 1 financial institutions are required to comply with anti-money laundering legislation by putting in place risk sensitive anti-money laundering policies and procedures to prevent their businesses from being used by money launderers and terrorists. They must also report suspicious activity to the Serious Organised Crime Agency (SOCA).

Some Annexe 1 Financial activities are carried out by businesses authorised by FSA and therefore supervised by FSA. In these situations any MSB activities will also be supervised by FSA.

As a supervisor HMRC is required to effectively monitor the annexe 1 financial activities taking place within MSBs along with the MSB activities.