Treasury has published the feedback on its consultation from last summer on amendments to the MLRs. It has now analysed the responses to the consultation, made the legislative changes, and most of the changes will take effect on 1 September.
The key changes:
- exclude AISPs from the definition of the “regulated sector”, but for the time being keep PISPs within it on the basis that PISPs are involved in payment chains and so may represent a higher risk than AISPs of being used for economic crime. Similarly, the proposal to remove bill PSPs and telecoms, digital and IT PSPs will not immediately be implemented, pending further research and evidence about the risks they present;
- exclude from the scope of the MLRs artists selling their own work over the €10,000 threshold, including where they do so through a company or partnership they are connected with. For the time being no changes to the definition of Art Market Participant will be made, for instance to include digital art and antiques, but the Government will continue to consider this;
- introduce a clear legal gateway for relevant supervisors to access, view and consider the quality of SARs that have been submitted, for supervisory purposes;
- will not include any clarification to the activities that make a person a “credit” or “financial” institution. Although it is agreed that clarification would be useful, the Government needs to consider further how to do this so as not to create unintended consequences of taking firms within or outside scope where it did not mean to do so;
- will enable the UK to implement FATF standards on proliferation financing;
- amending the scope of definitions relating to trust and company service providers to ensure greater alignment between the forms of arrangement the providers form and those that register with Companies House and expanding the scope of when a business relationship is established;
- expand the requirement to report discrepancies with Companies House information to cover also the ongoing business relationship, and for the obligation also to cover entities on the Register of Overseas Entities. To enable the Companies House reforms to take place first, which will make the regime function more effectively, these changes will not take effect until April 2023;
- allow greater information and intelligence-sharing among a broader range of authorities;
- extend FCA’s information gathering powers to create a level playing field between Annex I firms and crypto-firms;
- allow crypto-firms until September 2023 to implement solutions to comply with the Travel Rule;
- introduce new requirements on information collection in respect of unhosted wallets, so the requirements are not as onerous as those originally proposed;
- reflect the Government’s decision not, in fact, to build a “Bank Account Portal” as it would be uneconomic to do so post-Brexit; and
- require proposed acquirers of crypto-asset firms to notify FCA ahead of acquisitions so FCA can undertake a fit and proper assessment.