AFME proposes more clarification in MLRs

The response of the Association for Financial Markets in Europe to the Treasury consultation on improving the effectiveness of the MLRs. AFME draws out as particularly important:

• the need for greater clarity on what is meant by a “business relationship” and when it is “established” – because there are many differing interpretations;
• the phrase “acting on behalf of” is also widely interpreted, and this probably leads to some scenarios being subject to due diligence where this is disproportionate;
• guidance on risk factors is useful, and the response suggests some further scenarios that would be included by way of example;
• in principle, changing “complex” to “unusually complex” in the context of applying EDD would be useful although would not remove all situations of doubt;
• a risk based approach to EDD checks in relation to high risk third countries could be beneficial as the current approach can lead to disproportionate further checks; and
• the list of low risk factors could usefully be expanded.