Treasury has published the Government’s response following its Call for Evidence on the Money Laundering Regulations 2007 (MLR). Although respondents to the review largely supported the aim and content of the MLR, Treasury saw areas where it might improve the law and is consulting on some proposed changes. The main areas for change cover:

  • Scope of MLR: Treasury proposes to exempt from the MLR “non-lending credit institutions” who hold a consumer credit licence merely to allow extended payment terms (such as paying monthly fees to a gym). It also proposes to exempt very small businesses and seeks views on how to assess what should be exempt while not increasing money laundering risk. It proposes to extend the MLR to cover UK-based estate agents who deal in overseas properties. It considered many further representations about exempting or including various businesses but plans no other major changes to scope.
  • Criminal sanctions: Treasury proposes to remove criminal sanctions for regulatory breaches to encourage businesses to better apply the risk-based approach. It wants to discourage businesses from going further than necessary because they are worried about possible criminal sanctions. It seeks views on whether it should strengthen existing civil powers of regulators.
  • Reliance: Treasury proposes clarification to the MLR and to work further with supervisors so firms can more confidently place reliance on others to have carried out Customer Due Diligence.
  • Fit and Proper test: Treasury plans a right of appeal for decisions by Her Majesty’s Revenue and Customs together with guidance on how previous criminal conduct should be viewed.

Treasury will also work with enforcement agencies and supervisors to address concerns respondents raised on supervisory attitude and feedback. Treasury asks for comment by 30 August. (Source: Consultation on Changes to MLRs)