Regulation Requirements

The main additional requirements apply to banks and financial advice firms, for example, but not to general insurance brokers. These are:

• The appointment of a Money Laundering Reporting Officer (MLRO). The MLRO must be an approved person with function CF11 on the regulator’s register.
• Staff must be trained in anti-money laundering procedures and the law.
• There must be an internal reporting procedure.
• The MLRO must make an annual internal report.
• A requirement to obtain customer identification.

The regulations provide more detailed obligations regarding customer due diligence. For example, the explicit requirements for firms to undertake on-going monitoring of business relationships and for firms to identify not just the customer, but the beneficial owner of the customer.
The regulations also introduce a risk-based approach, which means that organisations should implement due diligence requirements based on the level of risk or likelihood they have identified that the business may be used to launder money or fund terrorism.

Businesses should also identify the particular factors relating to transactions and relationships that may indicate an enhanced level of risk.

It is a criminal offence for a business within the regulated sector to fail to comply with the Money Laundering Regulations. Failure to comply can lead to a maximum penalty of 2 years imprisonment and/or a fine.

In 2012, the government considered making changes to this, including reducing offences to civil matters to enable firms to take a more proportionate and risk based approach.

The government is also considering including estate agents dealing in overseas properties to come under the regulations, and removing very small organisations from them, probably those under £15,000 turnover per annum.