On 10 January 2020 the UK implements the measures contained within the 5th EU Money Laundering Directive into UK domestic law through amendments to the 2017 Money Laundering Regulations. The CCAB AML guidance will be updated accordingly and we will publish it here when it's available.
Many of the changes under 5MLD don’t affect bookkeeping practices – as the changes mostly relate to letting agents, art dealers and crypto currencies which have now been brought into scope. However, there are a few key areas that you will need to address in your policies and procedures:
- Those providing both direct and indirect tax advice are now captured by the rules (e.g., repayment agents who act in the course of business as tax advisers, often referred to as High Volume Repayment Agents).
- When taking on a client that is a limited company, LLP or certain types of trust, you must check that details of the Persons with Significant Control (PSC) have been filed with Companies House and report to Companies House any discrepancies you identify. PSC include beneficial owners as well as those with significant influence or control over them.
- Where the customer is a legal person, trust, company, foundation or similar legal arrangement you must take reasonable measures to understand the ownership and control structure of that legal person, trust, company, foundation or similar legal arrangement.
- Electronic ID verification can be considered as a reliable source of evidence, where the electronic process is free from fraud and provides sufficient assurance of the identity of the individual. As with other ID verification means there is a record keeping obligation of five years.
- Your policies should be updated to identify transactions that are complex or unusually large (rather than the previous, 'and unusually large').
- Policies and procedures should be amended to assess and mitigate the money laundering and terrorist financing risks when new products, business practices or technology are adopted.
- If you have exhausted all possible means of identifying the beneficial owner of a company, you must take reasonable measures to verify the identity of the senior managing official in the company and fully document what steps you have taken to establish such a person.
- Enhanced due diligence (EDD) is required for additional risk factors including golden visa applicants, dealing with a client remotely (not face-to-face) without reliable electronic CDD, transaction risks including oil, arms, precious metals, tobacco, ivory and protected species.
While members will be required to be fully compliant with the new requirements, ICB will take into account the short lead-in time businesses have been given to implement all the new requirements in assessing the response to non-compliance. Each case will be assessed on its own merits.
> The Amendment to MLR17 can be read here
> The Directive can be read in full here
> Accountancy Europe's factsheet on the changes can be read here