In October 2020 the UK Government published The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 which amend The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR17).
Whilst some provisions within this new regulation came into force on 6 October, others will not take effect until after the end of the Brexit Transition period (on 6 April 2021 and 10 March 2022 respectively).
The changes which took effect from 6 October 2020 are predominantly to provide clarification as follows:
- When the customer is the beneficiary of a life insurance policy, the new obligations elaborate that firms must “consider the nature and identity of the beneficiary of the policy when assessing whether there is a high risk of money laundering or terrorist financing” and then use this to determine the nature of controls to be put in place to manage and mitigate the risks identifie
- Credit or financial institutions maintaining correspondent relationships from a third country must apply additional enhance due diligence (EDD) measures only where these relationships involve the execution of payments.
- With respect of the use of electronic identification in Know Your Customer (KYC) checks, the new regulation clarifies that the source of this information should provide the firm with comfort “to a degree that is necessary for effectively managing and mitigating any risk of money laundering and terrorist financing”.
The key changes which come into force on 6 April 2021 relate to provisions for trusts (including additional trusts to be included on the trust register) following the UK Government’s technical consultation earlier this year) – more information on this consultation is available here.
Finally, on 10 March 2022, regulations extending the existing obligation to report discrepancies in beneficial ownership registers will come into force in relation to trusts.
The full text of the new regulation can be found here.