The UK Finance response to the Treasury consultation on improving the effectiveness of the MLRs notes that there are some parts of the existing regulations that are unhelpful in that they:
- drive tick box compliance; or
- require disproportionate resource for activities that have little to no impact on detecting or preventing financial crime.
It is also critical of the inconsistent approach to supervision, saying that a consistent and enhanced approach would much better manage the regulatory perimeter. Key observations include:
- echoing other respondents’ wish for clarity on what is meant by “establish a business relationship”;
- the need for guidance on when source of funds checks should be done;
- what “acting on behalf” of means and whose identity should be verified;
- UK Finance’s views on what digital identity guidance should cover;
- how best to deal with CDD carve-outs in insolvencies;
- that triggers for mandatory EDD are disproportionate (especially as regards high risk third countries) and do not encourage a risk based approach and how the NRA could play a bigger role in identifying targeted risks;
- the lack of clarity on use of pooled accounts, with a suggestion that FATF’s principle on correspondent banking should apply to these accounts and that Treasury needs to consider the significant blockers to banks being able to use the SDD approach suggested;
- support for wider focus on the NRA but a recognition of its limitations; and
- support for a change to using GBP instead of euros, and aligning the thresholds rather than applying a conversion rate.