The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 have been amended by statutory instrument to take account of changes imposed by the EU’s 5th Money Laundering Directive, with effect from 10 January 2020.
The UK Legal Sector Affinity Group (LSAG), which includes the Law Society of Scotland and all the legal sector supervisors named in the Anti-Money Laundering regulations (AML), has published a key changes document to help the legal profession comply with the new requirements. These include,
- a duty to collect proof of registration for entities
- a duty to inform the registry of any discrepancies in their information
- changes to client due diligence and enhanced due diligence
Further information on discrepancy reporting (including how to submit a report) can be found on the UK Government website.
The document forms part of a wider refresh of the UK Legal Sector AML Guidance which is due for publication in the Spring, pending HM Treasury approval.
The legislation requires firms to be compliant with effect from the 10 January 2020 but there has been a short lead in time between the regulations being laid in Parliament on 20 December and the legislation coming into force. The Law Society recognises this and will take a proportionate and risk-based approach to non-compliance after this date.
Graham Mackenzie, Head of AML at the Law Society of Scotland, said “Money laundering can be linked to some of the most serious examples of crimes – crimes which I’m sure the legal profession would be appalled to have any connection with. The amendments to the 2017 regulations, in light of the EU 5th Directive, further strengthen the UK’s economic crime regime, helping to ensure a hostile environment for criminals who seek to invest or spend their ill-gotten gains in this country. Criminals will always seek to exploit the weakest link, therefore it is essential that Scottish solicitors continue their efforts to keep the proceeds of crime out of the profession”
The anticipated changes to the Trust Registration regime have not been included in this legislation but will be introduced during 2020. HMRC will run a technical consultation in early 2020, which will include the proposed scope, data sharing and collection mechanisms, along with proposed penalties for non-compliance. It will also include relevant draft legislation for review and comment.