Understanding the new anti-money laundering regulations

The Sixth Money Laundering Directive was required to be implemented into national law across the EU by 3 December 2020. In some countries, such as Germany who implemented the Sixth Directive last month, this required a paradigm shift in how money laundering offences are prosecuted in Germany. The German law abandoned the concept of a catalogue of predicate offenses in favour of an ability to capture profits derived from any criminal activity. 

FCA investigators have clearly not been furloughed

In 2019, the FCA registered nearly £400 million in fines for compliance breaches, and despite the pandemic, investigators are striking out high and fast against non-compliance. In the first half of 2020, only four cases have resulted in a fine, but collectively those fines have already reached £100 million.

The sixth directive may impose a five year minimum prison sentence for serious money laundering offences

The Sixth Money Laundering Directive is already on its way

The Fourth Directive and Fifth Directive are soon to be joined by new EU wide anti-money rules.

The Sixth Directive is due to be implemented into national law by 3 December 2020. While the UK anti-money laundering regime already complies with a great deal of it, the Sixth Directive calls for the introduction of a new corporate offence for failing to prevent money laundering, which is not included in the UK regime.

The UK already has a few corporate ‘failure to prevent’ laws on the books in the form of failure to prevent bribery and tax evasion. Whether the UK is required to implement this new failure to prevent money laundering rule will depend on the status of the transition period at the time. The Sixth Directive focuses on harmonising money laundering offences across the EU, such as extending criminal liability to legal persons and aiding and attempting to commit money laundering should be an offence. 

Continue reading →

While much of the world has been in lockdown and most staff have been working from home, financial crime has not disappeared. In fact, fraud has become more sophisticated than ever with many criminals using the pandemic as an opportunity to exploit vulnerabilities. It is crucial to adapt financial crime controls such as anti-money laundering (AML) procedures to the specific needs of the crisis. Financial crime procedures should be kept under frequent review as the pandemic progresses.

Here are some tips on how to protect your firm from financial crime during the pandemic and beyond.

When it comes to compliance training, the antidote to boredom is relevance.

Training that isn’t relevant is boring, unengaging and of limited effect. Training that resonates with the user, that feels like it was written with his or her particular industry, practice area or job role in mind, works.

Content that isn’t engaging isn’t going to stick and will ultimately waste the learner’s time. Boring content, along with a lack of interaction, severely harms the effectiveness of training. With regulators increasingly taking a deeper look at the content of training, not just completion records, training that merely ‘ticks the box’ with a one-size-fits-all approach will ultimately fail.

Much of the world is still under lockdown, but many businesses are working hard to keep economically active during the crisis. Unfortunately, where there is financial activity, there’s also the risk of financial crime. Google has seen more than 18 million corona or COVID-19 related malware and phishing attacks per day.

In our 15-minute on-demand webinar, our Director of Learning and Content Nick Henderson takes us through the schemes scammers are deploying to exploit the pandemic. He also shares guidance on how we can protect ourselves and our businesses against these risks.

Watch now

AML training requirements for gambling operators

What is the requirement?

All gambling operators have a statutory duty to keep financial crime out of gambling. The Proceeds of Crime Act 2002 (POCA) obligates gambling operators to be alert to customers who try to gamble unlawfully acquired money. Money laundering includes both using illegal cash to clean the money as well as simply using it to fund gambling.

Money laundering risks are not only found in the operator-to-customer relationship, however. They can also occur in business-to-business relationships, as well as with any third parties operators contract with.

Details of the extension of the trust registration service under the Fifth Directive

On 24 January 2020, HMRC launched their promised technical consultation on changes to the Trust Registration Service (TRS) to be made under the Fifth Anti-Money Laundering Directive.

The changes will focus on the registration requirements of all UK and many non-EU resident express trusts, whether or not they incur a UK tax consequence. This could extend the number of registrable trusts from around 200,000 to over two million. 

From 10 January 2020, the Fifth Anti-Money Laundering Directive (2018/843) is in force in the UK and around the European Union. The changes are not as extensive as those that were introduced in the Fourth Directive, such as the concept of risk based due diligence, but the Fifth Directive will impact an increasing number of businesses who must now have regard to money laundering laws.

What is Ultimate Beneficial Ownership?

A beneficial owner is any person controlling or owning more than 25% of the shares or voting rights. The details of beneficial owners must be recorded and held on a central register accessible to competent authorities. Ultimate beneficial owner refers to someone who ultimately owns or controls the customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement. An ultimate beneficial owner (UBO) is always a natural person.