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.