The UK Government is currently reviewing the country’s anti-money laundering and counter-terrorist financing (AML-CFT) laws following a recent broad-based consultation with stakeholders.
The review is looking at three different areas: the overall effectiveness of the regimes and their scope; whether key elements of the current regulations are operating as intended; and the structure of the supervisory regime including the work of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
With this review, the Government is seeking to ensure that the UK’s anti-money laundering and counter terrorist financing regime effectively deters money laundering and terrorist financing activity, whilst being proportionate and managing burdens on businesses.
Also, the review provides the Government the opportunity to examine the UK’s AML-CFT framework following Brexit and how it may be changed to suit the UK’s particular circumstances.
The UK has had regulations intended to prevent money laundering in place for nearly thirty years. Over time, these have evolved in line with international standards set by the Financial Action Taskforce, an international AML-CFT standard-setter, and multiple EU Money Laundering Directives.
The most substantial recent revision was in June 2017, transposing the European Fourth Money Laundering Directive and the Funds Transfer Regulation. However, there was another significant revision in January 2020, with the transposition of the Fifth EU Money Laundering Directive. These revisions served to expand the UK’s AML-CFT regime in scope, bringing in new sectors outside of the original financial industry focus.
According to the Government, UK will continue to follow the FATF’s risk-based approach to AML-CFT, with the review focused on improvements the effectiveness of the current rules rather than on wholesale changes.
At the time of writing, the Government is continuing to review the feedback it received from the broad-based consultation, which concluded in October 2021. The Government has not provided a specific or detailed timetable for legislative change in this area, but there is a strong possibility that the review could lead to a number of changes to the UK’s AML-CFT regime in the future, likely affecting the scope of the regime, which entities and persons are subject to AML-CFT requirements, and the functions of compliance officers and others charged with preventing the UK financial system from being used to launder money and commit other financial crimes.
Given the broad reach of the current AML/CFT laws and regulations, covering as they do a broad range of actors from financial institutions to lawyers, accountants and many others in the financial and legal services sector, such changes could hopefully lead to improvements for many businesses which may be unduly burdened by these rules.