HM Treasury has revised MLR17 to take account of the changes required by 5MLD. The new legislation is effective from 10 January 2020.
The CCAB has published updated guidance for the January 2020 amendments of the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. This guidance has not yet been approved by HM Treasury.
Many of the changes under 5MLD don’t affect accountancy firms – as the changes bring letting agents, art dealers and crypto currencies into scope. However, there are a few key areas that firms will need to address in their policies and procedures:
- Firms providing both direct and indirect tax advice are now captured by the rules (eg, repayment agents who act in the course of business as tax advisers, often referred to as High Volume Repayment Agents).
- When you take on a limited company or LLP as a client, you must check that details of the Persons with Significant Control have been filed with the registrar (ie, Companies House) and report any discrepancies you identify. Read further guidance on how to report a discrepancy.
- Confirmation that electronic ID verification can be considered as a reliable source of evidence, where the electronic process is free from fraud and provides sufficient assurance of the identity of the individual.
Other relevant changes include
- Firm policies should be updated to identify transactions that are complex or unusually large (rather than and unusually large).
- Policies should be amended to ensure that when new products, business practices or technology are adopted, the firm assesses and mitigates the money laundering and terrorist financing risks of these.
- If a firm has exhausted all possible means of identifying the beneficial owner of a company, they must take reasonable measures to verify the identity of the senior managing official in the company.
- Enhanced due diligence is required for any transaction where either of the parties is established in a high-risk third country, or where the transaction is complex or unusually large.
- Additional risk factors have been added including golden visa applicants, dealing with a client non face-to-face without reliable electronic CDD, and transaction risks including oil, arms, precious metals, tobacco, ivory and protected species. These will affect your risk assessment as part of CDD.