UK anti-money laundering measures in cheque

On 26 June 2017 changes were made to UK anti-money laundering measures to help prevent money laundering as well as terrorist and organised crime financing. It’s aim, amongst other things, is to increase the transparency of who owns and controls companies in the UK and to ensure business compliance in respect of risk assessment and due diligence. If it works as well as it should, this greater focus on risk assessments will make it significantly more difficult for terrorists to move money through the UK’s financial system. I know, that all sounds pretty heavy to me too. But don’t panic, a few key points to this are outlined here in nice bite sized chunks of information, just to whet your appetite…

The 2017 legislation is so detailed it’s not possible to address everything it covers in one go here. So, at a glance, there are a few points that stood out for me concerning transparency and due diligence, as these areas of honesty and risk assessment form the backbone to how I like to work and how I like to see others working:

  • Now, you might expect this one to be in place already, but surprisingly it is only now that anyone who owns or controls 25% or more of a company, the ultimate beneficial owner, must be registered with the government and this must be kept up-to-date. Information about beneficial ownership will now be stored in a database and will be readily accessible by banks and law firms. Why is this important? Risk assessment, accountability and due diligence, that’s why. A central registry showing who really owns and controls UK companies will open up a new era of corporate transparency in Britain which should help to tackle corruption, money laundering and terrorist financing. And businesses being open and honest about who is driving them can only be a good thing in terms of accountability and due diligence, right? I remember when my old mum said to me, “James, transparency is a good trait to have; if you’re open and honest about your intentions and what you’re doing, people will trust you”. That approach did not work when Natalie from up the road’s dad answered the door to me though. Weird…
  • Companies will also now have to apply for exemption from customer due diligence (CDD). If you’re not too sure what this is, CDD information comprises facts about a customer that enables an organisation to assess the extent to which the customer exposes it to a range of risks. These risks include money laundering and terrorist financing. Businesses and organisations need to ‘know their customersʼ for a load of reasons, not least:
    • to be as certain as possible that customers are who they say they are, and that it is suitable or safe to provide them with products or services
    • to guard against fraud, including impersonation and identity fraud – obvs!
    • to help identify over time what may be or become unusual, including changes in details and movements
    • to enable the business to assist investigating bodies and the judicial system, by providing information on customers who might be under investigation

    Not that I’m into the idea of a police state, big brother, Orwell’s 1984, agencies and service providers trawling my online behaviour and my emails (my wife tried that once and she ended up with the same face that Natalie from up the road’s dad had all those years back), but it is a surprise to me that in this current climate exemption from CDD has been automatic under certain circumstances right up until now. Go figure! I’m not saying that under no circumstances should exemption take place, but to not have to record the reasons and to justify CDD exemption is kind of worrying for me. I just like to know that someone’s on top of this…

  • The thresholds for customer identification have also now been lowered. “What does that mean?” you ask. Well, this means that customer due diligence must take place for anyone trading goods in cash with a value of more than £8,750, this is down from £13,120. Casinos will also have to perform CDD for customers wishing to place a bet or collect winnings of more than £1,750. That might sound a bit harsh, but consistency is key here and the reasoning behind this is the same as those outlined above; to be safe and to assess the risks of money laundering and terrorist financing among other things. And yes, I’d imagine that screaming at a croupier “I will bet £1,749.99p on red, and not a penny more!” could raise some suspicious eyebrows!

So, there’s a little introduction to how procedures have now been tightened. Hopefully, it’s given you enough information to go on to take Money Laundering Legislation (2017) seriously and to have a head start in finding out more information. All businesses covered by anti-money laundering laws will need to make changes to their procedures, systems and controls to comply with the latest requirements. So, if you haven’t done already, it’s well worth checking it out. Also, you’ve learned not to be too transparent when it comes to Natalie from up the road’s dad, he’s got quite a temper on him and a pretty good throwing arm.

If your business is covered by anti-money laundering laws, it would be prudent to ensure that yourself and your employees are aware of the most vital aspects of:

  • the Proceeds of Crime Act, Terrorism Act and Money Laundering Regulations
  • the risks of money laundering in business
  • the ‘know your customer’ paradigm and the different levels of due diligence
  • how to identify and report suspicious activity

To ensure business compliance at all levels, sign up to an easy-access, online learning course with Engage in Learning and get yourself and your staff covered. Remember, laundered money is not clean money, it could be catastrophic for your company…and you thought putting one of those new five pound notes through the wash was a problem. Good grief!

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