Treasury has published its feedback to its consultation on implementing MLD4 into UK law and the draft Money Laundering Regulations 2017. We will cover the consultation in more detail in a separate article. They key points, however, include:
- that the turnover threshold for those who engage in financial activity on a limited basis will increase to £100,000 as proposed;
- setting out in the new Regulations a summary of the risk factors that will dictate whether to apply CDD to existing customers, with separate further guidance;
- clarifying that setting up a company or trust is a business relationship regardless of whether it is the only piece of work the provider is asked to carry out;
- setting out a non-exhaustive list of factors that should be taken into account for application of SDD, and stating that pooled client accounts should not automatically be subject to SDD, although the risk-based approach may operate to apply it in specific situations;
- requiring third parties on whom reliance is to be placed to provide requested documents within two working dates (although noting that very few respondents said they would rely on third parties in any event);
- confirming that, for the present, the UK gambling sector is considered low-risk, but acknowledging this may not always be the case;
- a decision to apply all available exemptions for e-money products, with sectoral guidance addressing when SDD could apply in other situations;
- addressing who could be a supervisory authority for estate agency businesses, and responding on an update of risks relating to letting agencies and clarifying who has duties to perform CDD on whom in the estate agency sector;
- giving clarity and further guidance on the different types of correspondent banking relationship;
- explaining the steps the Government will take to address disproportionate application of EDD and financial inclusion for PEPs, especially low-risk PEPs;
- responding to comments and views on company and trust beneficial ownership and registers;
- addressing updates to legislation to provide the protections for reporters that MLD4 requires;
- looking at registration of MSB’s and the fit and proper test;
- responding to comments on data retention; and
- setting out administrative sanctioning powers.
The consultation closes on 12 April, because the changes must come into effect by 26 June.