Plans to update anti-money laundering rules in the pipeline

Plans to update anti-money laundering rules in the pipeline

The Treasury is going ahead with plans to update the anti-money laundering rules to clarify due diligence requirements, remove euro currency values and enhance the trust register.

Following a consultation on the rules, the Treasury have announced they will make a number of changes to the current anti money laundering (AML) regime to improve the effectiveness of the rules to crack down on economic crime.

Although the exact date for introduction of the revised regulations has not yet been confirmed, the Treasury announced that it ‘intended to publish the draft statutory instrument in the coming months for technical feedback, before presenting to parliament later this year’.

They also advised that a number of changes will be made to the Money Laundering Regulations (MLR), including some measures to simplify rules, clarify due diligence requirements and remove the legacy use of euros, replacing it with GBP sterling. This followed a review into whether the AML rules were fit for purpose in 2022, which identified a number of problem areas. These particular proposals were consulted on from March to June 2024.

The 10 potential key changes, listed below, will include amendments on the tax front, including the removal of stamp duty reserve tax (SDRT) from the list of ‘relevant taxes’ where a liability would result in a trust becoming registrable.

Key changes to the regulations include:

1. Enhanced due diligence (EDD) on complex transactions to clarify that EDD is required on ‘unusually complex’ transactions, instead of all complex transactions.
2. Enhanced due diligence on high-risk countries.
3. Due diligence on pooled client accounts (PCAs) to allow financial institutions to offer PCAs under a wider set of circumstances than currently permitted under the simplified due diligence (SDD) rules.
4. Due diligence triggers for certain non-financial firms remain unchanged, but guidance by regulatory bodies will be updated to clarify rules for art dealers and letting agents.
5. Currency thresholds in euros will be changed to GBP using a one-to-one conversion, i.e. €1,000 will become GBP 1,000.
6. Registration requirements for the Trust Registration Service (TRS) will be changed with introduction of de minimis exemption for certain trusts currently required to register on TRS and will simplify the criteria to determine whether a trust qualifies.
7. Onboarding of customers in bank insolvency scenario rules changed to provide for relevant carve-outs from customer due diligence requirements to assist customers of an insolvent bank to access new accounts rapidly and transact from them.
8. Regulation of sale of ‘off-the-shelf’ companies by trust and company service providers.
9. Registration and change in control for cryptoasset service providers will be reflected in amendments to Financial Services and Markets Act 2000 (FSMA).
10. Information sharing between supervisors and other public bodies; and enhanced supervisor cooperation with Companies House.