The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 have been published, amending the existing Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The amending Regulations incorporate changes made to EU legislation under the EU’s Fifth Anti-Money Laundering Directive. The majority of the amending Regulations provisions will come into force on January 10, 2020, with the exception of those governing: (i) customer due diligence on anonymous prepaid cards; and (ii) requests for information about accounts and safe-deposit boxes, which will come into force on July 10, 2020 and September 10, 2020 respectively.
5MLD entered into force on July 9, 2018, making a number of changes to the EU Fourth Money Laundering Directive. Member States were obliged to transpose 5MLD into their national laws within 18 months of its entry into force. Although the U.K. is due to leave the EU on January 31, 2020, it is obliged to implement the 5MLD changes into national legislation as the implementation deadline falls on January 10, 2020. The U.K. government has also previously made it clear that it intended to implement the changes irrespective of whether the U.K. left the EU. The amending legislation takes account of the responses received to HM Treasury’s April 2019 consultation on its proposed implementation of 5MLD.
The key aspects of the amending Regulations are:
- Industries newly subject to the U.K. Money Laundering Regulations: the scope of persons subject to the U.K. Money Laundering Regulations has been expanded, most notably to include crypto-asset exchange providers and custodian wallet providers; “crypto-asset exchange providers” include firms or sole practitioners that offer exchange services as creators or issuers of crypto-assets (e.g., through initial coin offerings) and crypto-asset automated teller machines; in a deviation from its April 2019 proposals, publishers of open-source software and non-custodian wallet providers will not fall within the scope of the Regulations;
- Due diligence: customer due diligence measures must be applied by letting agency businesses and art market participants (subject to certain de minimis thresholds), as well as by cryptoasset exchange providers and custodian wallet providers; enhanced customer due diligence measures should be carried out for business relationships or transactions involving persons established in high-risk third countries;
- Bank account portals: financial intelligence units and national regulators must be given access to details about U.K. bank accounts, building society accounts and safe deposit boxes for certain specified purposes, including where a national crime agency is carrying out its FIU functions, or any other law enforcement authority is investigating money laundering, terrorism, or carrying out its supervisory functions; and
- Crypto-asset businesses: new crypto-asset businesses will need to be registered with the U.K. Financial Conduct Authority before they can conduct crypto-asset activities, while crypto-asset businesses that are already operating prior to January 10, 2020 will have a transitional period until January 10, 2021 in which to register; crypto-asset exchange providers and custodian wallet providers must comply with certain reporting requirements and the FCA will maintain a register of such entities.
HM Treasury does not intend to issue further guidance on the amending Regulations as guidance has been prepared on a sectoral basis by supervisory and/or industry bodies. A list of this guidance is set out in the Explanatory Memorandum.