Treasury consults on MLR improvements

The Treasury is consulting on how to make the Money Laundering Regulations more effective.

The paper follows previous consultations on changes to the MLRs and picks up on comments about how many of the provisions of the Regulations are good, but that some targeted changes could help to make them more effective.

The paper looks at:

  • making CDD more proportionate and cost effective: the paper looks at concerns raised over the years about the proportionality of CDD requirements. In particular it looks at:
    • whether the triggers for CDD are appropriate and clear;
    • whether there could be more clarity on when to carry out Source of Funds checks;
    • what “acting on behalf of” a customer means in the CDD context;
    • the best ways to support using digital identity in the verification process;
    • when EDD is needed and whether the proportionality and effectiveness of the High Risk Third Countries regime is appropriate; and
    • how to improve access to pooled client accounts.
  • strengthening system coordination, looking at:
    • key information sharing and collaboration gateways;
    • the role of Companies House; and
    • how firms should use the NRA.
  • giving clarify on the scope of the MLRs, specifically on:
    • changing thresholds currently expressed in euros to sterling;
    • potential gaps in TSCP regulation; and
    • alignment of registration and CIC requirements on crypto firms between the MLRs and FSMA.
  • reforming the Trust Registration Service registration requirements, including:
    • bringing certain non-UK trusts within scope;
    • simplifying trusts registration for estate management; and
    • introducing a de minimis level for low-risk non-taxable trusts.

This consultation is separate to the ongoing debate over changes to AML supervision – the Treasury is considering responses to its consultation on that and expects to make decisions on the future of the supervisory system “in the coming months”.

The current consultation closes on 9 June. Alongside it, the Treasury has published a survey on current compliance costs.

Emma Radmore