Regulatory and Compliance Training & Consultancy

Money Laundering Regulations 2017: Are You Ready?

April 2017

With the new Money Laundering Regulations 2017 soon to become law, is your firm ready?

The Money Laundering Regulations 2017, or to give them their full name, the not quite so snappy, “The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017”, will become law before the end of June 2017. New legislation is required as a result of the European Union 4th Money Laundering Directive (4MLD). Whilst there is much that will be familiar about the wording and requirements under this new 2017 anti-money laundering legislation, there are also some significant changes of which individual solicitors, firms and Nominated Officers need to be aware.

Some of the most significant changes can be found in the administrative requirements. For example, whilst the existing Money Laundering Regulations 2007 permitted a risk based approach towards anti-money laundering procedures and customer due diligence measures, something that was encouraged by the Law Society through their Anti-Money Laundering Practice Note, the new version of the regulations take this to a new level. All firms falling within the regulated sector, will be required to identify and assess the risks of money laundering and terrorist financing to which they are subject. This risk assessment, which must be in writing, kept up-to-date and produced to the Solicitors Regulation Authority upon request by them.

Also new is the requirement to appoint an individual within the firm, who is either a director, partner or member, to take responsibility for ensuring compliance with the Money Laundering Regulations 2017. This is a different role to the Nominated Officer, sometimes referred to as the Money Laundering Reporting Officer (MLRO), and is more akin to the role of the Compliance Officer for Legal Practice (COLP) or the Compliance Officer for Finance and Administration (COFA). One of the responsibilities this person will have will be to screen relevant employees, consultants and agents prior to their appointment as well as establishing an independent audit function within the firm to examine and evaluate the adequacy and effectiveness of the firm‘s anti-money laundering policies, controls and procedures and make recommendations where weaknesses exist. There is also an obligation to monitor the firm’s compliance with any recommendations made.

When the new regulations take effect, firms will now be required to notify the SRA of the identity of their Nominated Officer, something which was not previously required.

There are new provisions relating to the record keeping requirements with a greater emphasis on data protection than under the old anti-money laundering regulations. Firms in the regulated sector are required to keep copies of any documents and information obtained in satisfaction of the due diligence requirements for a period of five years. Only in limited circumstances can personal data be retained beyond this five year period.

Looking at Customer Due Diligence (CDD) measures, there have been some significant changes made to the requirements, particularly, in respect of corporate clients where much more information needs to be captured under the new provisions within the anti-money laundering legislation.

Generally, Customer Due Diligence is not required to be undertaken when acting for a client on an ‘occasional transaction’ where the value of that transaction is less than €15,000. However, the new anti-money laundering regulations will require those in the regulated sector to undertake Customer Due Diligence on all ‘occasional transactions’ where the value of the transaction exceeds €1,000 if amounts to a transfer of funds within the
meaning of Article 3.9 of the funds transfer regulation.

Significantly, the circumstances in which Enhanced Due Diligence will be applicable has been extended.

Outlined above is a summary of some of the changes being made, but for those seeking a clearer understanding of this important new UK legislation, our new Money Laundering Regulations 2017 training course will examine these changes, and more, in detail as well as providing you with clear and practical advice to help you achieve compliance with the new anti-money laundering requirements. For more details of this new anti-money laundering training course please look here.

The Money Laundering Regulations 2017 impose an obligation on those firms within the regulated sector to ensure that all relevant staff and agents are provided with training in relation to both money laundering and terrorist financing as well as data protection rules. Now is the ideal time to be make arrangements for in-house anti-money laundering training in fulfillment of your legal and professional duties.

For advice on anti-money laundering systems, procedures and internal controls please call Richard Lane on 0330 223 5346 or e-mail us at info@lfpro.co.uk.

If you would like us to keep you updated on the latest legal regulatory and compliance news, including details of any special offers on our accredited CPD training courses for solicitors or others working in the legal sector, sign up for our FREE newsletter.