On 31 July 2006, HM Treasury released a consultation document concerning implementation of the Third Money Laundering Directive (2005/60/EC). The Directive encapsulates the European commitment towards tackling the international problems of money laundering and terrorist financing.
The consultation ends on 20 October 2006, with HM Treasury to subsequently publish draft Regulations. It is anticipated that the completed Money Laundering Regulations will be laid before Parliament in mid-2007, with implementation of the Directive required by 15 December 2007.
Under the Directive, firms may be compelled to gather more information on existing customers than before. It will not be necessary however to engage in retrospective investigations on all existing customers. Organisations will be afforded a wider reliance on third parties in carrying out such customer due diligence. Third parties will include FSA authorised institutions, but specifically preclude certain bodies, such as money service businesses and casinos, until appropriate supervisory mechanisms are introduced. Final responsibility will remain with the organisations themselves.
Customer due diligence measures may be unnecessary when the customer is a credit or financial institution from an EEA state or from a third country deemed to impose equivalent standards to the Directive. Further, the measures may be unnecessary when the customer falls into a list of exemptions, for example public bodies or listed companies. Conversely, enhanced due diligence is required in potentially high-risk situations. The consultation paper requests feedback on the exceptions and on identifying certain high-risk situations.
The paper also considers listing additional supervisory authorities for certain sectors, such as estate agents and independent legal professionals. The paper also covers the Directive's provisions including record keeping and reporting obligations, internal procedures and training provisions.
There will be no alteration to the penalties for breaches of the UK anti-money laundering regime.
The consultation document can be viewed at: