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Crime Solicitors

UK strengthens defences against money laundering (16 March 2017)

Date: 16/03/2017
Duncan Lewis, Crime Solicitors, UK strengthens defences against money laundering

HM Treasury has announced that the UK is to create a new watchdog that will tackle potential weaknesses in the supervisory system which criminals and terrorists may be trying to exploit to launder money.

The Economic Secretary to the Treasury, Simon Kirby, unveiled the plans for a new Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which will help improve the overall standards of supervision and ensure supervisors and law enforcement work together more effectively.

OPBAS will complement the updated Money Laundering Regulations, published in draft form on Wednesday, which seek to bring the UK’s Anti-Money Laundering (AML) and Counter Financing for Terrorism (CFT) regime into line with the latest international standards.

The Regulations set out robust new standards of supervision, including requiring that all supervisors draw on common factors when developing risk assessments and maintain records of their investigations and decisions on disciplinary action.

Sectors at risk of being used to facilitate money laundering and terrorist financing are supervised by 25 organisations, 22 of which are accountancy and legal services providers’ professional bodies.

The Treasury says that professional body AML supervisors bring substantial benefits to the regime, as they are closest to the innovations and emerging risks in their sector. However, having several organisations supervising the same sectors and issuing guidance can lead to inconsistencies, which criminals may look to exploit.

Research shows that serious and organised crime costs the UK at least £24 billion every year – the creation of OPBAS is intended to ensure consistent high standards across the regime, while imposing the minimum possible burden on legitimate businesses.

OPBAS will set out how professional body AML supervisors should comply with their obligations in the new Money Laundering Regulations – and ensure they do so, with the powers to penalise any breaches of the new Regulations.

As guidance is updated to reflect the new Regulations, the government will work to approve one piece of AML guidance for each sector, to reduce and simplify the amount of guidance businesses need to follow.

This tailored guidance will complement the Joint Money Laundering Steering Group Guidance and the Financial Conduct Authority’s (FCA) crime guide.

The updated Money Laundering Regulations will also provide clarity to firms on how they should treat Politically Exposed Persons (PEPs).

The government response outlines a series of steps to address concerns about the unjustified and disproportionate withdrawal or potential restriction of financial services from domestic PEPs, their families and close associates.

The FCA will publish specific guidance on the treatment of low- and high-risk PEPs and will consult shortly.

Simon Kirby, Economic Secretary to the Treasury, said:

“This government has already done more than any previous government to tackle the threat of money laundering and terrorist financing, including setting up the Panama Papers Task force, hosting the London Anti-Corruption Summit in May – and recovering a record £255 million from criminals in 2015-2016.“

OPBAS should be operational by the start of 2018 and will be housed in the FCA. It will operate within the FCA’s existing governance arrangements, will be funded through a new fee on professional body AML supervisors – and will be legislated for by the end of the year.

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