Money laundering timeline 2018

Several rolls of US dollars

What to expect this year in AML

2017 was a big year in money laundering. The EU deadline for the implementation of the Fourth Money Laundering Directive came and went, with the UK passing its Money Laundering Regulations 2017 just in time, even as other EU nations rushed to catch up. However, the ink hadn’t even dried on the bills as the EU reached an agreement on the Fifth Money Laundering Directive late in December 2017, with the final text due to be agreed upon sometime in 2018.

Dealing with the fallout from the Fourth Directive, preparing for other crucial changes such as GDPR, and the expected FATF review of the UK are all set to ensure that 2018 is as significant a year in money laundering as the last one was.

Anti-money laundering compliance timeline for 2018

There are some important money laundering milestones to bear in mind for 2018. Here is a month by month guide to money laundering compliance.

January

The Sanctions and Anti-Money Laundering Bill was published last year and is due to begin its report stage in the House of Lords on 15 January. The bill is very much a function of Brexit, enabling the UK to impose sanctions and make updates and amendments to the AML regime in following the expected withdrawal of the UK from the EU in 2019.

The end of January is also the deadline for trusts to provide information to HMRC on their settlers, trustees and beneficiaries, as well as a statement of their accounts, assets and values. The Money Laundering Regulations 2017 requires HMRC to maintain a register of ‘taxable relevant trusts’ which include any UK or non-UK trust where the trustees are liable to pay any specified UK taxes. This is expected to cover 160,000-170,000 trusts. Unlike the Persons of Significant Control Register, this register will not be open to the public yet.

February

The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is due to go live early in 2018. It will be hosted by the Financial Conduct Authority (FCA) and is geared towards closing loopholes and ironing out differences in how anti-money laundering guidelines are applied by the myriad of professional bodies overseeing lawyers and accountants.

The new body will have the power to censure or remove AML supervisors that do not adhere to standards set out in the 2017 Money Laundering Regulations. OPBAS will be issuing sets of sector specific AML guidelines. Although increasing standardisation of AML guidance for business sectors may be welcome, there is likely to be a greater onus on keeping up to date with the latest information coming from regulators, as supervisory bodies rush to ensure their AML acts are together.

March

The Financial Action Task Force (FATF) is expected to begin its inspection of the UK’s AML regime. This wide-ranging review will assess the UK’s compliance with FATF recommendations. This will include an assessment of the systems and controls in place and an evaluation of their effectiveness. A mutual evaluation report will then be discussed and adopted at an FATF Plenary session, before being published in December 2018.

April

The French UBO register will go live. Companies must register their UBO details by 1 April, or face sanctions including six months imprisonment and a fine of €7,500.

May

In the US, new rules on UBO’s will take effect. The United States Financial Crimes Enforcement Network (FinCEN) requires financial institutions operating in the US to process and vet sanctions data, negative-news data, corporate associations, individual associations and more on ultimate beneficial owners. Essentially, institutions will need to be able to track the entire relationship from customer to UBO, and all the corporate vehicles in between them.

Mass amounts of data will need to be processed and researched for tens of millions of companies worldwide. This tidal wave of data comes at the same time that GDPR will go live in Europe at the end of May.

Anyone dealing with the data of EU citizens will have to comply with a much stricter set of data protection regulations. So it is vital to keep your data protection compliance as up to date as your AML compliance.

June

By 26 June, a firm must apply to its AML supervisory body for approval of its beneficial owners, officers and managers. The supervisory authority must grant that application unless the person has been convicted of a relevant criminal offence. Continuing to operate without approval beyond 26 June 2018 will be a criminal offence.

July

The final text of the Fifth Money Laundering Directive is expected to be formally adopted by the European Council and European Parliament. After publication, implementation will likely take 18 months, either in late 2019 or early 2020. National beneficial ownership registers are likely to be made public, while registers of trusts will be opened to persons with a legitimate interest. Further changes to due diligence procedures, including an EU wide black list of high risk territories, regulation of cryptocurrencies and a reduction of the beneficial ownership stake from 25% to 10% is also expected.

October

Changes are expected to be announced to the UK SARs regime. October is due to see the completion of a review of suspicious activity reporting by the Home Office and the National Crime Agency (NCA). Firms should be ready to deal with expected changes resulting from the Action Plan that could include; greater focus on suspicious individuals and companies, as opposed to transactions and further powers for the NCA to oblige firms to provide further information on SARs and conduct more intelligence gathering.

December

The European Central Bank will discontinue the production of €500 notes. The UK already ceased handling the denomination in 2010. The note will still remain legal tender and new €100 and €200 will be introduced.

The FATF Mutual Evaluation Report of the UK is due to be published, just in time for even more changes to come in 2019.

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