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HMRC internal manual

Money Laundering Regulations: Registration

Trust or Company Service Providers (TCSPs): Why some businesses are not TCSPs

A number of sectors that fell within the definition of TCSPs felt that they really were at a very low risk of being used by money launderers, and that the policies and procedures they needed to put in place under the regulations, were disproportionate to the risk that they or their customers may be used by money launderers or terrorists.

We have always been concerned that any regulation of TCSPs should be proportionate to the risk, and with Treasury we have listened to the concerns of the businesses affected and have consulted the Serious Organised Crime Agency and other government bodies to identify the risk of these businesses being used by money launderers.

We reviewed our guidance to address these concerns and to focus the AML requirements on businesses that pose the highest risk. A number of businesses, including Will writers and the majority of non executive directors, now fall outside the scope of the regulations.

The MLR9 Registration Notice is to be submitted to HM Treasury for approval. This means that when MLR9 receives Treasury approval, the extent to which a business can demonstrate that this guidance has been followed will be taken into account by HMRC and a court, when they decide whether or not there has been a failure to comply with the MLR 2007 or the EC Wire Transfer / Payments Regulation.

Our interpretation of the regulations

Some businesses have expressed concern that this approach is not legal. The MLR 2007 implement the requirements of European legislation - the Third European Money Laundering Directive, and the purposive approach Treasury has taken in interpreting the directive, is the one used by most continental European countries when interpreting their own legislation. It is also the approach which is taken by the European Court of Justice in interpreting EU law.

From 1973, our courts have had to use the purposive approach when deciding on EU matters. So it is legal and it is the way most of the other European countries will interpret the directive. The EU Commission has already indicated to us that they broadly agree with our interpretation.