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Money Laundering Regulations, Procedures, Risk, Compliance and Due Diligence

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 came into force on 26 June 2017 (MLR 2017).

MLR 2017 replaces the Money Laundering Regulations 2007 (MLR 2007) and the Transfer of Funds (Information on the Payer) Regulations 2007, which were previously in force by implementing the EU’s 4th Directive on Money Laundering.

MLR 2017 creates a number of new responsibilities across all sectors and introduces a more risk-based approach to tackling money laundering and terrorist financing. It is extremely important that all individuals and businesses are fully aware of the wide-reaching implications of the 2017 Regulations and know how and if they are complying as there are strict and in some cases, criminal sanctions in place for failure to comply.

Persons covered by MLR 2017 (“relevant persons”) largely remain the same as under the previous Regulations. In addition, all gambling providers are now caught by MLR 2017 and trustees have greater obligations relating to transparency of beneficiaries in their trusts.

The 2017 Regulations do not apply to those engaging in very occasional financial activity with a turnover of under £100,000.

At Janes Solicitors, our Financial Crime and Regulatory Lawyers will advise you on all aspects of your Money Laundering procedures, risk, compliance and due diligence. 

It is essential that you and your firm remain informed about all legal developments in this area and how they impact your specific sector. Janes Solicitors provide our wide client base with relevant, proactive and useful advice to help ensure compliance and peace of mind in your business or practice.

Contact Janes Solicitors now to discuss how the recent changes in the Money Laundering Regulations impact on you and your business.

Money Laundering Regulations 2017

Here we provide a broad overview of some of the changes introduced by MLR 2017. For specific advice for your sector, please contact one of our lawyers now.

Customer due diligence 

The 2017 Regulations have restricted the situations in which simplified due diligence is allowed. Under MLR 2007, simplified due diligence was automatically applied to certain situations; however, this has been removed. Now, customer and geographical risk factors must be taken into account when considering whether a relationship or transaction is low risk and, therefore, can be dealt with using the simplified procedure.

Enhanced due diligence is now required for all transactions with jurisdictions included in the new ‘high risk third country’ list.

Risk assessment

Relevant persons are now required to produce a money laundering and terrorist financing written risk assessment, including details on the firm’s customers, products and services, and delivery channels, as well as the jurisdictions you deal with and types of transactions you make. This information must be used to create and maintain the firm’s policies and procedures.

Policies must be revised in order to comply with the 2017 Regulations, including implementation of the new due diligence rules and training. Policies must also be in writing and approved by senior management. The Regulations also state that, where appropriate with regard to the size and nature of your business, you must adopt ‘appropriate internal controls’, such as appoint the relevant number of MLROs, training, staff screening, data protection and updating the SRA with the required information.

The requirement to appoint an officer responsible for compliance with the Regulations is additional to your obligation to appoint an MLRO and COLP (although the same person can hold more than one of these roles).

Our solicitors will help you review and revise your risk assessments, policies and internal controls to ensure they are compliant.

Politically exposed persons (PEPs)

The requirements relating to foreign politically exposed persons (PEPs) have now been extended to include UK PEPs. Under the Regulations, you are required to have appropriate risk management systems and procedures in place to determine whether a client, or the beneficial owner of a client is a PEP, or a family member of a known close associate of a PEP. You will also need procedures in place to manage the enhanced risks arising from your relationship with the client.

New money laundering criminal offence

A new criminal offence is created under MLR 2017 where any individual recklessly makes a false or misleading statement in the context of money laundering. A conviction could result in a fine or up to two years imprisonment.

Contact our Financial Crime and Regulatory Solicitors in London

Janes Solicitors are committed to providing the highest quality advice and representation to our clients. It can be difficult to keep up with all the legal developments and requirements that impact on your firm and your clients. Our solicitors work with you to help you remain compliant so you can concentrate on achieving success in your business. Contact us today on 020 7930 5100, or via our online contact form.

For expert legal advice and representation, call Janes Solicitors today 020 7930 5100 or complete our online enquiry form and one of our lawyers will be in touch as soon as possible.

We are there when you need us. Available seven days a week, you can call us on our out-of-hours service number on 07789 622 430.