On 10th January 2020 new Anti-Money Laundering (AML) regulations came into force as required by the Fifth Money Laundering Directive. These changes are intended to further combat money laundering by improving transparency across all member states. This article explains some of the key changes in the new regulations.
New Obliged Entities
The regulations broaden the scope of regulated sectors to now include the following:
- Letting agents – where transactions involve a monthly rent of €10,000 or more.
- Tax advisors – the definition of ‘tax advisor’ has been expanded so as to include those who offer material aid or assistance on tax matters.
- Art intermediaries –this is expanded to include galleries, auction houses and free ports who deal with transactions exceeding €10,000.
All obliged entities (which already includes law firms, accountants and financial institutions) must inform Companies House if there is a discrepancy between the information they hold about a beneficial owner of a company and the information that is on the public register of Persons with Significant Control. The Government has not defined ‘discrepancy’ but the intention is for material differences to be reported, e.g. factual errors rather than typos. Companies House guidance on reporting obligations can be found here.
Beneficial Ownership Requirements
The new regulations change the requirements for obliged entities on verifying the identities of customers or beneficial owners. For example, in the legal sector, there is a new requirement to obtain a Basic DBS check to support the application of a new beneficial owner, officer or manager.
The regulations set out circumstances under which electronic identification processes may be considered in carrying out customer due diligence in order to provide greater clarity on what may be relied upon. The regulations have introduced an extended list of persons on whom obliged entities must conduct enhanced due diligence to include ‘natural persons or legal entities established in a high risk third country’ and also ‘business relationships or transactions involving high risk third countries’.
Electronic money can be used for making payments which do not necessarily involve a bank account transaction in the traditional way. The new regulations remove the threshold for which customer due diligence must be carried out. This will result in e-money firms needing to conduct far more customer due diligence checks.
National Register of Bank Account Ownership
The AML regulations will establish a central automated mechanism enabling identification of natural and legal persons who hold bank accounts with UK credit institutions.
Professional Body Supervisors
The AML regulations provide that all self-regulatory bodies shall publish an annual report containing information on their supervisory activity.
Trust Registration Service
The scope of this register has been broadened requiring trustees or agents of all UK express trusts to register those trusts with the Trust Registration Service.