The SRA announced earlier this year that it would be launching a crackdown against firms who fall foul of money laundering procedures.

As an initial assessment, the SRA wrote to a sample of 400 out of the approximately 7,000 SRA-regulated firms required to comply with the Money Laundering Regulations 2017, asking them to demonstrate compliance with the regulation. The SRA was mainly checking that firms have a money laundering risk assessment and implementation plan in place. The assessment came in response to an increase in dirty money entering the UK and a lack of reporting of suspicious activity by lawyers and accountants, with lawyers often seen as an easy target for laundering money.

The Fifth Money Laundering Directive is set to be transposed into national law by 10 January 2020. The 5MLD came about in response to terrorist attacks across the EU and offshore leaks investigated in the Panama papers. The core aim of the 5MLD is to address modern-day money laundering concerns that were not covered in the Fourth Directive. One of the key changes to money laundering regulations that the Fifth Directive will bring is that Member States will have to implement enhanced due diligence (EDD) measures to monitor suspicious transactions involving high-risk countries more strictly.

How will the Fifth Money Laundering Directive affect enhanced due diligence?

The Fifth Directive will require enhanced due diligence when dealing with transactions from high-risk countries. As well as obtaining evidence of the source of funds and source of wealth, information on beneficial ownership and the background of the intended transaction must also be recorded. The EU may also designate a ‘blacklist’ of high-risk countries for money laundering.

Money laundering is a worldwide crime that is estimated to total over $2 trillion annually. In the past 20 years, laws have been put in place in the UK to crack down on this crime. This includes Client Due Diligence (CDD) procedures your firm must follow to ensure that your firm is not assisting in money laundering activities. When staff or businesses witness any suspicious activity, they are required to submit a suspicious activity report (SAR). Here is a short guide to what a SAR consists of and how to submit one.

UK estate agents were hit last week with surprise HMRC inspections as part of a week-long crackdown on money laundering in the property industry.

HMRC paid surprise visits to estate agents after they were suspected of trading without being registered as required under money laundering regulations. In all, agents in London (35), Leicester (5), South Bucks and Berkshire (4), Greater Manchester (3), Watford (1), Wakefield (1) and Wolverhampton (1) were raided in order to determine their compliance with money laundering regulations of 2017.

This blog was updated in May 2022.

Cryptocurrencies and blockchains are set to be a key compliance theme of 2019, with the upcoming Fifth Money Laundering Directive setting out to regulate cryptocurrencies. While the first and most common cryptocurrency is Bitcoin, there are now close to 2,000 in existence, with the number continuing to grow. This level of growth causes two core issues; namely that cryptocurrencies are currently unregulated and that they can be used to launder money due to the unique way in which they are traded. In addition, some cryptocurrencies are either fake or are used to fuel financial scams.

A lot of the guidance below is taken from the cryptocurrency module in VinciWorks’ anti-money laundering refresher course.

What are cryptocurrencies?

In cryptocurrency, a network of peers maintains a complete history of all transactions, and the balance of every account using that cryptocurrency. This secure system is known as the blockchain.

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VinciWorks recently hosted a webinar on sanctions that gave guidance on the latest regulations, the affect Brexit will have on sanctions and more, the Iran deal and more. During the webinar, Director of Course Development took several questions on the topic and we have continued to answer the questions. Here are all the questions that have been asked on the topic, along with the answer. If you can’t find the answer to your question here, feel free to tweet us your question.

Frequently asked questions on sanctions regulations

To what extent is the humanitarian sector affected by the sanctions?

Sanctions reporting covers everyone, and under the new legislation dealing with someone under sanction can result in criminal penalties. If in doubt, you should contact the Office of Financial Sanctions Implementation for dealing with anyone under sanction.

Do you have any advice when dealing with a US Specially Designated National (SDN) when an entity isn’t sanctioned by an individual?

There could be an issue in paying an entity if the SDN is a beneficiary or beneficial owner. You should check the specific regulations of the OFAC sanctions on the individual and consider applying for a license if necessary.

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