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Money laundering regulation

 

Anti-money laundering, counter-terrorism and financial sanctions legislation

Contents:

Introduction


Anti-money laundering, counter-terrorism and financial sanctions legislation


Impact of UK regulation on businesses


General legislation on anti-money laundering, counter-terrorism and financial sanctions


  Proceeds of Crime Act 2002


  UK counter-terrorism and sanctions legislation


  EU control of cash on entering and leaving EU


Money laundering and counter-terrorist legislation in the regulated sector


  Proceeds of Crime Act 2002


  Money Laundering Regulations 2017


  EU Payments Regulation


  Counter-Terrorism Act 2008

What's new?

Introduction

This Legaleze article gives an overview of UK anti-money laundering (AML) regulation and counter-terrorism measures. Although it is generally treated as a separate subject, we also cover briefly the subject of economic and financial sanction controls because these also concern managers of businesses and their advisers in relation to compliance with the law on making and receiving payments and monitoring business relationships.

For a summary of the development of legislation during this period, see the section on historical development of AML laws.

International anti-money laundering measures

The author Jeffrey Robinson wrote: “the phrase [‘money laundering’] perfectly describes what takes place – illegal, or dirty, money is put through a cycle of transactions, or washed so that it comes out the other end as legal, or clean, money. In other words, the source of illegally obtained funds is obscured through a succession of transfers and deals in order that those same funds can eventually be made to reappear as legitimate income”.[The Laundrymen: Money Laundering the World's Third Largest Business Hardcover,1996]

International efforts at government level to combat money laundering go back more than thirty years. Legislative and enforcement measures were concerned initially with drug trafficking, but later extended to measures encompassing terrorist and general criminal activities. A summary of the development of legislation during this period is given in the section on historical development.

The leading international organisation in this field is the Financial Action Task Force on Money Laundering (FATF) which was established by the G-7 Summit held in Paris in 1989. Recognising the threat posed to the banking system and to financial institutions, the G-7 Heads of State or Government and President of the European Commission convened the Task Force from the G-7 member States, the European Commission and eight other countries. The FATF recommendations influence the legislation of the European Union and the United Kingdom.

EU anti-money laundering legislation

The first measures adopted by the EEC (as the EU was then known) were contained in the Council Directive 91/308/EEC of 10 June 1991 known as the First Anti-money Laundering Directive (the 1991 Directive) on the prevention of the use of the financial system for the purpose of money laundering. This Directive was modified by Directive 2001/97/EC of 4 December 2001, the Second Anti=money laundering Directive (the 2001 Directive).

The 1991 Directive as modified in 2001 was replaced by Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005, the Third Anti=money Laundering Directive (the 2005 Directive). This Directive was designed to take account of international coordination and cooperation, in particular the Recommendations of the FATF which were substantially revised and expanded in 2003.

The EU Commission made a proposal for a Fourth Money Laundering Directive in February 2005 (2013/0025 (COD). This proposes a number of changes to the regime, including greater harmonisation of EU member states’ aml regulation. In particular, it is proposed that legal entities and trusts to maintain registers of beneficial owners accessible to competent authorities and persons subject to the aml regime. At the time of writing, this proposal is passing through the EU legislative process.

Economic sanctions


International sanctions are adopted against states or organisations from time to time to punish and discourage the commission of crimes against humanity, terrorism and other acts deemed to be unacceptable. Such sanctions may restrict or forbid financial, trade and other dealings with specified states, organisations or individuals associated with them.
The Charter of the United Nations (UN) signed in 1946 empowered the UN Security Council to decide what measures not involving the use of armed force were to be employed to give effect to its decisions, and to call upon the Members of the United Nations to apply such measures. These included complete or partial interruption of economic relations and means of communication.


United Nations sanctions include for example those taken at various times against the states of Democratic Republic of Congo, Somalia, South Africa, Zimbabwe, Iran and Iraq, and against the organisations known as Al-Qaida and the Taliban.


The Council of the EU may adopt economic sanctions under Article 215 of the Treaty on the Functioning of the European Union. Examples of action taken include the Regulations adopted in respect of Burma/Myanmar, Central African Republic, Iran, Ivory Coast, North Korea, Syria and Ukraine.

UK anti-money laundering, counter-terrorism and financial sanctions legislation


Money laundering was first criminalised in the United Kingdom in respect of the proceeds of drug trafficking, by means of an offence in the Drug Trafficking Offences Act 1986 . The Criminal Justice Act 1993 added further money laundering offences including laundering money from drug trafficking, concealing or transferring proceeds of criminal conduct and ‘tipping-off’, and failure to disclose knowledge or suspicion of terrorism related offences.

This legislation has been superseded by the Proceeds of Crime Act 2002 (POCA).
Counter-terrorist legislation of a temporary nature (initially focused on Northern Ireland) comprised the Prevention of Terrorism (Temporary Provisions) Act 1989, the Northern Ireland (Emergency Provisions) Act 1996 and •ss.1-4 of the Criminal Justice (Terrorism and Conspiracy) Act 1998. (c. 40). This legislation was replaced by the Terrorism Act 2000 (TA 2000) which introduced more permanent measures, extending measures connected with UK all forms of terrorism.


The UK government has implemented the EU Directives partly by means of primary legislation such as the TA 2000 and POCA, and partly by the Money Laundering Regulations 2007 (MLR 2007).

The United Nations Act 1946 empowered the UK government, acting by the Privy Council, to apply economic sanctions and other measures to give effect to any decision the UN Security Council in respect of sanctions under UN Charter article 41.


Sanctions are also applied from time to time by the EU Council. The UK government will implement such sanctions by means of a statutory instrument made under the European Communities Act 1972 s. 2(2).

Impact of UK regulation on businesses

The general thrust of the legislation is to criminalise money laundering and terrorism financing terrorism and assisting the same, and to encourage the reporting of suspicious transactions to the authorities.

A general distinction may be made between legislation of general effect on all sectors, and particular legislation directed at the ‘regulated sector’, which broadly include financial institutions, insurance companies, payment service providers, real estate dealers and agents, professional advisers, trust and company service providers, high value item dealers and casinos.

Stricter regulation applies to the regulated sector which must undertake ‘customer due diligence’ by carrying out identity checks, monitor business relationships and source of funds and keep records. Such businesses must also be supervised by an appropriate regulatory authority.

Comment: while the aims of the laws described in this article are understandable and deal with serious threats to law and order, the successive waves of UK legislation passed to meet international conventions and new threats have resulted in a set of complex, frequently over-lapping and at times baffling regulations which impose heavy compliance burdens on business.

It has been observed that the aml regime in the UK has adopted a high degree of ‘super equivalence’ or ‘gold plating’ in transposition of the EU ML Directives and is unique in making transactions suspected of involving money laundering subject to supervening statutory illegality in the absence of consent from law enforcement agencies. Another aspect of gold plating is arguably the fact that an aml offence may be based on any underlying criminal conduct, not only serious crime.

General legislation: anti-money laundering, counter-terrorism and financial sanctions

Anti-money laundering, counter-terrorism and financial sanctions legislation of general application in the UK comprises the following:


* Proceeds of Crime Act 2002 which creates general money laundering offences applicable to all businesses;
* UK counter-terrorism and sanctions legislation; and
* Regulation (EC) No 1889/2005 on controls of cash entering or leaving the Community

Proceeds of Crime Act 2002

The following is a brief summary. For further detail, see the detailed section on Proceeds of Crime Act 2002 (POCA) money laundering offences.

POCA provides powers for enforcement authorities in the UK to recover in criminal and civil proceedings money and other assets which are deemed to be the proceeds of crime. It also creates a set of criminal offences intended to combat money laundering (aml offences). Some of the offences apply generally to all persons, while certain offences apply specifically to persons in the ‘regulated sector’ which covers a range of business and professional activities in the financial, real estate and professional advisory sectors.

General money laundering offences under POCA

The main money laundering offences of general application include:


* Concealing criminal property: a person commits an offence if he conceals, disguises, converts or transfers criminal property; or removes criminal property from England and Wales or from Scotland or from Northern Ireland.


* Arrangements: a person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person. ‘Suspects’ means that the person must have thought that there was a possibility, which was more than fanciful, that the other person was or had been engaged in or had benefited from criminal conduct. A vague feeling of unease is not enough.


* Acquisition, use and possession: a person commits an offence if he acquires, uses or has possession of criminal property. The offence is not committed if the person acquired, used or had possession of the property for adequate consideration

Defences

Certain defences apply which if made out mean that no offence is committed.

Defence of making an ‘authorised disclosure’

No aml offence is committed if a person he makes an ‘authorised disclosure’ (see below) and (if the disclosure is made before he does the act) he has the ‘appropriate consent’ (see below), or he intended to make such a disclosure but had a reasonable excuse for not doing so.

Authorised disclosures: a disclosure is authorised if it is a disclosure to a constable, a customs officer or a nominated officer by the alleged offender that property is criminal property. The disclosure must be made before the alleged offender does the prohibited act. If the disclosure is made after the alleged offender does the prohibited act, he must have a reasonable excuse for his failure to make the disclosure before.

Appropriate consent: an appropriate consent is consent of a nominated officer, constable or customs officer to do a prohibited act if an authorised disclosure is made to that person. A ‘nominated officer’ is a person appointed by the person’s employer, e.g. a Money Laundering Reporting Officer.


A person is treated as having the appropriate consent if he makes an authorised disclosure to a constable or a customs officer, and either:


* he does not receive notice within the seven working day ‘notice period’ from a constable or customs officer that consent to the doing of the act is refused;; or
* the ‘moratorium period’ has expired; the moratorium period is the period of thirty-one days starting with the day on which the person receives notice that consent to the doing of the act is refused.

Defence if crime not or believed not committed in UK

An aml offence is not committed if the accused knows or reasonably believes that the relevant criminal conduct occurred in a country outside the United Kingdom and the conduct was not, at the time it occurred, unlawful under the criminal law then applying in that country. Certain offences are excluded from this defence (currently offences under the Gaming Act 1968 and under the Financial Services and Markets Act 2000 s.23 & s.25).

Customer’s rights against bank or other reporting party

The courts have held that if the bank makes a suspicious activity report (SAR) to the aml authorities in the form of an ‘authorised disclosure’ as set out in POCA, the bank’s refusal of a bank to honour a customer’s instructions (during the time when the bank has made an authorised aml disclosure and the notice period or moratorium period has not expired) is not a breach of contract nor is it in breach of the customer’s rights under the European Convention on Human Rights. Nor can the bank be compelled to give the reasons for its actions.

Judicial review of SOCA decision: it appears that in some circumstances, a decision of the Serious Organised Crimes Agency (SOCA) (from October 2013 replaced by the National Crime Agency) to refuse consent to a transaction may be challenged in judicial review proceedings.

UK counter-terrorism and financial sanctions legislation

The following is a summary of UK counter-terrorism and financial sanctions legislation. For further detail, see the detailed section on UK counter-terrorism legislation.

HM Treasury maintains HM Treasury’s Consolidated List of Financial Sanctions Targets

which contains a list of persons and entities which are subject to UK enforced sanctions under the various legislation referred to below.

UK sanctions legislation

The United Nations Act 1946 empowered the UK government, acting by the Privy Council, to apply economic sanctions and other measures to give effect to any decision the UN Security Council in respect of sanctions under UN Charter article 41.


Sanctions are also applied from time to time by the EU Council. The UK government will implement such sanctions by means of a statutory instrument made under the European Communities Act 1972 s. 2(2).

Terrorism Act 2000

The Terrorism Act 2000 (TA 2000) created various offences penalising the assistance or financing of terrorism. The main provisions to note are:


* Money laundering: a person commits an offence if he enters into or becomes concerned in an arrangement which facilitates the retention or control by or on behalf of another person of terrorist property by concealment. It is a defence for a person charged with an offence to prove that he did not know and had no reasonable cause to suspect that the arrangement related to terrorist property. [TA 2000 s.18]


* Disclosure of information: this offence applies where a person believes or suspects that another person has committed an offence under the TA 2000, and bases his belief or suspicion on information which comes to his attention in the course of a trade, profession or business, or in the course of his employment (whether or not in the course of a trade, profession or business).
The offence does not apply if the information came to the person in the course of a business in the ‘regulated sector’ (see below).
The person commits an offence if he does not disclose to a constable as soon as is reasonably practicable his belief or suspicion, and the information on which it is based. It is a defence for a person charged with an offence to prove that he had a reasonable excuse for not making the disclosure.


Proscribed organisations: The legislation contains special definitions of ‘terrorism’ and ‘terrorist property’. In this connection, it is important to be aware of the list of proscribed organisations in order to avoid the commission of a TA 200 offence by involvement in dealings with such an organisation. The Government (via the Home Office) has the power to proscribe terrorist organisations under TA 2000 s.2. It maintains a list of proscribed organisations.

Anti-terrorism, Crime and Security Act 2001 freezing orders

The Anti-terrorism, Crime and Security Act 2001 (ATCSA 2001) was enacted to counter the threat of terrorist attacks in the light of the 9/11 terrorist attacks on New York and Washington UK. Among many other anti-terrorist measures, the Treasury is empowered to make ‘freezing orders’ whereby persons are prohibited from making funds available to or for the benefit of a person or persons specified in the order. Any such order must apply to all persons in the UK and all persons elsewhere who are nationals of the UK or are legal entities under the law of any part of the UK (ATCSA 2001 s. 5).

Terrorist Asset-Freezing etc. Act 2010

The purpose of the Terrorist Asset-Freezing etc. Act 2010 (TAFA) Part 1 is to give effect in the UK to UN resolutions and EU Regulations relating to terrorism.


Designated persons [TAFA ss. 1/2]: TAFA applies to funds and economic resources owned or controlled by ‘designated persons’ who include: persons designated by the Treasury for person for the purposes of TAFA or under powers given to the Treasury under certain conditions; and a natural or legal person, group or entity included in the list provided for by the EU Regulation (EC) No 2580/2001 on combating terrorism.


TAFA offences: TAFA creates a number offences including:


* Dealing with funds or economic resources owned, held or controlled by a designated person if he knows, or has reasonable cause to suspect, that he is dealing with such funds or economic resources;
* Making available funds or financial services (directly or indirectly) to a designated person if he knows, or has reasonable cause to suspect, that he is making the funds or financial services so available;
* Making available economic resources (directly or indirectly) to a designated person if he knows, or has reasonable cause to suspect that he is making the economic resources so available, and that the designated person would be likely to exchange the economic resources for funds, goods or services;
* Intentionally participating in activities knowing that the object or effect of them is (whether directly or indirectly) to circumvent any of the above prohibitions.


Exceptions and licences: there are certain exceptions to the prohibitions, and the Treasury may licence certain actions.

Control of cash entering or leaving the EU

Regulation (EC) No 1889/2005 of the European Parliament and of the Council of 26 October 2005 on controls of cash entering or leaving the Community (EUCCR) imposes a duty on individuals to declare any cash carried to a value of EUR 10 000 or more on entering or leaving the EU. [EUCCR art.3.1].

The following is a summary. For further detail, see Control of cash entering or leaving the EU.

Cash: for this purpose ‘cash’ means not only banknotes and coins that are in circulation as a medium of exchange, but also travellers cheques and other negotiable instruments in bearer form or are endorsed without restriction, made out to a fictitious or blank payee or otherwise in such form that title thereto passes upon delivery.

UK implementation: the EUCCR is directly applicable in all EU member states. In the UK, the regulation is enforced by HM Revenue & Customs (HMRC) under the Control of Cash (Penalties) Regulations 2007 (CCPR 2007). Further information is available from the HMRC website under ‘Declaring cash when entering or leaving the UK’.

Money laundering and anti-terrorist legislation in the regulated sector

Anti-money laundering and counter-terrorist legislation applicable to the financial sector include the:

* Proceeds of Crime Act 2002 regarding specific offences applicable to businesses in the   ‘regulated sector’;
* Money Laundering Regulations 2007;
* EU Payments Regulation; and
* Counter-Terrorism Act 2008 directions

Proceeds of Crime Act 2002

In addition to creating AML offences which apply generally, POCA creates two AML offences which apply oly to the so-called 'regulated sector'. The following is a summery; for further detil, refert to Proceeds of Crime Act 2002 (POCA) money laundering offences.

Regulated sector: the ‘regulated sector’ is defined in a complex set of definitions in POCA s.330/sched.9 but in brief includes:


* banks and credit institutions
* stock brokers and investment firms
* insurance companies and insurance intermediaries
* auditors, accounts, book-keepers, tax advisers
* real property dealers and estate agents
* trust or company formation and management
* legal or notarial services
* trading in goods for cash of at least 15,000 euros
* operating a casino
* auction platforms for emissions.

Exceptions: there are certain exceptions to the above, including among others businesses where the financial activity is incidental and is within strict limits.

The money laundering offences which apply only in the regulated sector include:


* Failure to disclose : a person commits an offence if he fails to disclose that he knows or suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering; ;disclosure must be to a ‘nominated officer’ appointed by the person’s firm or an authorised official of the National Crime Agency. There are exemptions in relation to the offence in certain circumstances for certain professional legal and other advisers who have privileged information.


* Tipping off: a person commits an offence if he discloses any matter within a money laundering disclosure he has already made, or if he discloses that an investigation into allegations of a money laundering offence is contemplated or being carried out and:
- the disclosure is likely to prejudice any investigation that might be conducted following the disclosure; and
- the information on which the disclosure is based came to the person in the course of a business in the regulated sector.

Money Laundering Regulations 2017

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLR 2017)came into force on 26 June 2017. These Regulations replace the Money Laundering Regulations 2007 (SI 2007/2157)and the Transfer of Funds (Information on the Payer) Regulations 2007 (SI 2007/3298) with updated provisions which implement in part the Fourth Money Laundering Directive 2015/849/EU (“fourth money laundering directive”) of the European Parliament and of the Council of 20th May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing (OJ L 141, 05.06.2015, p73) and the Funds Transfer Regulation 2015/847/EU (“funds transfer regulation”) of the European Parliament and of the Council of 20th May 2015 on information accompanying transfers of funds (OJ L 141, 05.06.2015, p1).

The MLR 2017 require businesses including:

* credit and financial institutions;

* auditors, insolvency practitioners, external accountants and tax advisers;

* independent legal professionals;

* trust or company service providers;

* estate agents;

* high value dealers;

* casinos; and in certain circumstances:

* auction platforms

i.e.'relevant persons' to carry out ‘customer due diligence’ including identity verification, monitoring of business relationships and source of funds, and to register with HMRC unless already supervised by another body (although there is a lacuna in respect of independent legal professionals who are not solicitors or barristers).

The following is a brief summary. For further detail, see the detailed section on the Money Laundering Regulations.

The MLR 2017 require relevant persons to carry out risk assessments, adopt policies, controls and procedures, carry out ‘customer due diligence’ and other obligations upon the financial services sector and other persons (called ‘relevant persons’) to detect and prevent money laundering and terrorist financing..

HM Revenue & Customs have guidance for businesses on whether the Money Laundering Regulations apply to a business as well as detailed practical guidance on how to comply for businesses which are subject to the MLR.

Businesses subject to the MLR must register with the appropriate supervisory body (see Supervision below) if they are not already supervised (e.g. by the FCA or a professional body). Businesses should follow the relevant supervisory body’s guidance on aml and the MLR. Following such guidance will be important in establishing a possible due diligence defence to any charge of breaching the MLR.

Customer Due Diligence

Application of customer due diligence measures: a relevant person must apply ‘customer due diligence measures’ (CDD) when he:


* establishes a ‘business relationship’;
* carries out an ‘occasional transaction’ (i.e. a transaction amounting to 10,000 euro or more, carried out in a single operation or several linked operations;


CDD must also be applied when he suspects money laundering or terrorist financing, or doubts the veracity or adequacy of documents or information previously obtained.
CDD must be applied at other appropriate times to existing customers on a risk-sensitive basis.


Customer due diligence measures consist of: verifying the customer's identity, identifying the ‘beneficial owner’ and ascertaining the purpose and intended nature of the business relationship.


Meaning of beneficial owner: in the case of a legal entity, a ‘beneficial owner’ means any individual who ultimately owns or controls (directly or indirectly) more than 25% of the shares or voting rights (except in the case of a company whose securities are listed on a regulated market). A similar test applies to partnerships and special rules apply in other cases.

Comment: ‘Customer due diligence’ was formerly known and often still is called ‘Know Your Client’ (KYC). While the basic aim of the customer due diligence regulations is understandable, they are often a source of inconvenience and annoyance to customers, and burdensome for firms to operate. This is so particularly in cases where the customer is a legal entity in a group or owned by offshore or multiple shareholders.

Ongoing monitoring


Ongoing monitoring: a relevant person must conduct ‘ongoing monitoring’ of a business relationship which means scrutiny of transactions undertaken, the source of funds and keeping the documents, data or information obtained for CDD purposes up-to-date.
Timing of verification: a relevant person must normally verify the identity of the customer (and any beneficial owner) before the establishment of a business relationship or the carrying out of an occasional transaction.


Requirement to cease transactions: if a relevant person is unable to apply CDD in relation to any customer, he must not establish a business relationship or carry out an occasional transaction with the customer, and terminate any existing business relationship with the customer. He should also consider whether he is required to make a suspicious transaction report to the authorities.


Simplified due diligence: there are exceptions to CDD in certain cases including customers which are a credit or financial institution and a company whose securities are listed on a regulated market.


Enhanced customer due diligence and ongoing monitoring: a relevant person must apply on a risk-sensitive basis enhanced CDD measures and enhanced ongoing monitoring in the case of ‘politically exposed persons’ (PEPs) and where the customer has not been physically present for identification purposes.


Banks and credit institutions: special rules apply for banks and credit institutions.

Record keeping


Record-keeping: a relevant person must keep CDD and monitoring records for at least five years from the date the business relationship ends or the occasional transaction is completed.

Risk assessment, policies, controls and procedures

In order to prevent activities related to money laundering and terrorist financing, a relevant person must carry out a risk assessment, establish and maintain appropriate and risk-sensitive policies, controls and procedures relating to CDD due diligence measures and ongoing monitoring, * reporting, record-keeping, internal control, risk assessment and management.


Special rules on aml policies and procedures apply to credit or financial institutions, auction platforms and issuers of electronic money.

Training

A relevant person must take appropriate measures so that all relevant employees of his are made aware of the law relating to money laundering and terrorist financing; and regularly given training in how to recognise and deal with transactions and other activities which may be related to money laundering or terrorist financing.

Supervision and registration

Tthe MLR 2017 provide for supervision and registration and allocates supervisory authorities for different relevant persons:


* Money service businesses, high value dealers and trust or company service providers which are not otherwise registered are subject to a system of mandatory registration.
* Businesses in other sectors are required to register if their supervisor decides to maintain a register.

Supervisory authorities

The following bodies are supervisory authorities:


* Financial Conduct Authority (FCA): supervisory authority for most FCA authorised firms, and certain other financial and money transfer businesses.
* Professional bodies: each of the professional bodies listed in MLR Sched.3 as below is the supervisory authority for relevant persons who are regulated by them. This includes most professional bodies regulating accountants, lawyers and tax advisers.
* Commissioners of Revenue and Customs: supervisory authority for ‘high value dealers’; trust or company service providers, money service businesses, auditors, external accountants and tax advisers, bill payment service providers, telecommunication, digital and IT payment service providers which are not supervised by the FCA or one of the above professional bodies listed in MLR sched.3;

* Gambling Commission: the supervisory authority for casinos.
DETI: the supervisory authority for insolvency practitioners authorised by it under article 351 of the Insolvency (Northern Ireland) Order 1989.

* Secretary of State: the supervisory authority for insolvency practitioners authorised by him under section 393 of the Insolvency Act 1986 (grant, refusal and withdrawal of authorisation).


Fit and proper test: money service businesses and trust or company service providers must not be registered unless the business, its owners, its nominated officer and senior managers are fit and proper persons.

EU Payments Regulation

The following is a brief summary. For further detail, see the EU Payments Regulation.

Regulation (EC) No 1781/2006 of the European Parliament and of the Council of 15 November 2006 on information on the payer accompanying transfers (the EU Payments Regulation) came into effect on 1 January 2007. The Regulation is directly applicable in the EU Member States although the UK Transfer of Funds (Information on the Payer) Regulations 2007 provide additional UK enforcement measures for the EU Regulation.

The EU Payments Regulation applies to payment service providers and requires both payer and payee service providers to record, check and maintain certain information about the payer in connection with every transfer of funds. When a payment service provider transfers funds they must normally send 'Complete Information on the Payer' with the transfer. This allows the authorities to trace payments if necessary. If the payment service providers used by the payer and the person receiving the funds are both within the EU then, unless full details are requested, the sender need only give the account number of the payer or another unique identifier selected by the payment service provider.

Further guidance: see http://www.hmrc.gov.uk/mlr/your-role/EU-payments-reg.htm

Enforcement: infringement of the EU Payment Regulations may give rise to civil penalties and an offence punishable on conviction on indictment, to imprisonment for a term not exceeding two years, to a fine or to both.

Counter-Terrorism Act 2008

Under the Counter-Terrorism Act 2008 (CTA 2008) s.62 and Sched.7, the UK Treasury has powers under certain conditions to give directions to combat certain ‘Terrorist Financing’ and ‘Money Laundering’ in a country (other than an EEA state).

Financial sector: a direction under the CTA 2008 s.62 may be given only to a particular person or category of persons operating in the financial sector. This definition of the financial sector is much narrower than the scope of the ‘regulated sector’ which applies to anti-money laundering legislation. The definition covers credit or financial institutions incorporated or doing business in the UK, subject to certain exclusions.

The CTA s.62 power has been used on three occasions to direct the UK financial sector to cease dealings with Iranian entities linked to Iran’s proliferation-sensitive nuclear and/or ballistic missile programmes. The last order made in 2012 was revoked following an EU regulation covering the same ground.

UK counter-terrorism and financial sanctions legislation is dealt with in more detail in the detailed section on UK counter-terrorism legislation.

What’s new item on this topic [see What’s new page or archive for full item]:

 

[Page updated: 22/11/2017]

 

<Back to Money laundering regulation introduction

Further information:

Historical development of AML laws

 Proceeds of Crime Act 2002 (POCA) money laundering offences

UK counter-terrorism legislation

Control of cash entering or leaving the EU.

Money Laundering Regulations

EU Payments Regulation