Following on from my blog published 09 May 2016 “A Partnership of Equals? The Government’s New Anti-Money Laundering Action Plan” the Fourth Money Laundering Directive (“4MLD”) is required to be implemented by 26 June 2017.

4MLD requires regulated Firms (the category of which has been expanded) to carry out and document the results of a risk assessment of the money laundering and terrorist financing risks they face. Companies and trusts must also now collect information on their beneficial ownership with information being stored in a central register. Overall, 4MLD enhances the risk based approach to customer due diligence and the definition of politically exposed persons (“PEPs”) to whom Enhanced Due Diligence (“EDD”) must be applied has been widened.

In the UK the Government published draft UK Money Laundering and Transfer of Funds (Information on the Payer) Regulations (“MLR 2017”). It was understood that a final version was to be published after the recent General Election on 08 June so Parliament will need to get moving!

4MLD now embraces additional types of business not formerly subject to AML regulation, for example:

  • High value goods dealers are now included where the amount of cash payment is 10,000 Euros rather than 15,000 Euros as before
  • Letting agents potentially to the extent they carry out “estate agency work” as defined by the Estate Agents Act 1979

And a different approach is now to be taken on when Simplified Due Diligence (“SDD”) is applied and when EDD must be applied. 4MLD provisions mean that the decision whether or not to apply SDD will become more complicated. Instead of reference to certain types of clients or products attracting SDD by default, firms will need to carry out an assessment to a series of factors such as customer risks; product/service/delivery channel risks as well as geographical risks.

In light of 4MLD and MLR 2017 the Joint Money Laundering Steering Group has consulted on revised guidance to be issued and reference to this guidance will be key in determining AML compliance for firms. A tracked version is available on their website. HM Treasury have also indicated that it will approve separate AML guidance for sectors in due course. Watch this space.

And as if this weren’t enough the European Commission’s legislative proposal for 5MLD was published last year on 05 July 2016. It continues to be “under development”.