Are you up-to-date with Anti-Money Laundering Regulations?2 min read

14/Feb/2020

On 10 January 2020, new anti-money laundering regulations came into effect in the UK, following 5MLD, or the EU’s fifth Money Laundering Directive. The new legislation, known as MLR 2019, enhances the already existing MLR 2017.

MLR 2017 focused on the requirements set for private sector firms to prevent money laundering. Risk assessments, preventative policies, conscientious record-keeping and increased customer due diligence were highlights of this regulation. MLR 2019 builds upon these principles, augmenting them to keep up with changing technologies and practices.

Here are a few key updates you’ll find in MLR 2019:

Risk assessments must incorporate new high-risk factors and continue to monitor certain applicants. These factors include transactions between the applicant and parties in high-risk third countries, clients who are beneficiaries of life insurance policies or third-country nationals seeking to gain citizenship through investments. Examples of additional risk are transactions without identification safeguards or those related to the sale of certain commodities, such as oil, arms or other valuable items.

E-money thresholds for customer due diligence have been lowered. Previously, firms could waive customer due diligence if the maximum about of money stored electronically was €250; this amount has now been lowered to €150. Customer due diligence can also be forgone in cases where a payment instrument that uses electronic money is not reloadable and is capped monthly at €150, only spendable within the UK; the payment instrument is solely used to purchase goods and services; and the payment instrument is not funded by anonymous electronic money.

Customer due diligence record requirements must be updated; any discrepancies must be reported to Companies House. Firms must fully comprehend the ownership and management structure of their corporate clients, recording any difficulties in identifying the construction of the organisation. Furthermore, any inconsistencies between the firm’s findings and records and the information listed in the Companies House register must be promptly disclosed.

Many businesses working with cryptoassets must register with the FCA and comply fully to MLRs. These include businesses that work as cryptoasset exchange providers and custodian wallet providers. Furthermore, the FCA possesses the capability to appoint a skilled person to report activity that might be concerning to the compliance of the MLR and to fix or prevent a failure of compliance, as well as inform customers when cryptoasset activity falls outside of the jurisdiction of the Financial Ombudsman Services or the Financial Services Compensation Scheme.

As these changes continue to occur in regulations, it is important that you and your organisation stay on top of the developments and maintain compliance. Our integrated risk management solution, CyDesk, ensures that adjustments to regulations, including the MLR 2019, are automatically accounted for and tracked. Anti-money laundering compliance does not have to be complicated – choosing a proactive solution like CyDesk makes sure your compliance risks are highlighted and managed.

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