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HMRC internal manual

Money Laundering Regulations: Compliance

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HM Revenue & Customs
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Legislation: Counter Terrorism Act 2008: Introduction

The Counter Terrorism Act 2008 Schedule 7

Schedule 7 of this Act:

  • Addresses the risks from money laundering, terrorist financing and the proliferation of nuclear, radiological, biological or chemical weapons.
  • Gives new powers to HM Treasury to issue directions to firms in the financial sector including MSBs.
  • Requires MSBs in the regulated sector to comply with directions issued by HM Treasury
  • Appoints HMRC as an enforcement authority and gives new powers to HMRC to supervise MSBs to ensure their compliance with the requirements imposed by any direction
     

A direction will contain specific legal requirements imposed by HMT on businesses in the financial sector in relation to their transactions or business with

  • a person carrying on business in a country;
  • the government of a country;
  • a person resident or incorporated in a country.
     

HM Treasury may give a direction if one or more of the following conditions are met in relation to a country outside the European Economic Area (EAA).

HM Treasury may give a direction if one or more of the following apply:

  • The Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities
  • HM Treasury reasonably believe that there is a risk of terrorist financing or money laundering activities and that this poses a significant risk to the national interests of the UK.
  • HM Treasury reasonably believe that a country is involved in developing nuclear, radiological, biological or chemical weapons and that this poses a significant risk to the national interests of the UK.
     

Specific guidance will be issued with each direction and you will need to read the conditions imposed very carefully to find out what businesses need to do.

Businesses will have to identify the customers or transactions that are affected and may need to carry out more detailed checks on them.

They may need to do one or more of the following:

  • carry out enhanced customer due diligence
  • carry out ongoing monitoring of customers in a business relationship
  • report all transactions with certain people and organisations.
  • cease business with certain people and organisations.
     

If a MSB is required to limit or stop business with certain people and organisations they or their customers can apply for a license to exempt them from this. HM Treasury will provide further information on how to apply for licenses when they issue a direction.

Officers should sign up to Treasury’s e-mail alert system to find out when a direction has been issued.