Anyone involved in the world of financial crime compliance would attest to its unrelenting pace of change. As quickly as the latest regulatory requirements are mapped and understood, something else appears on the horizon. To demonstrate just how fast-paced this all is, this paper looks back over the developments of the last four years.
The year 2017 is a good place to start as it was a big year for the UK financial crime legislative landscape. The UK was then a member of the European Union and June of that year was when EU member states had to transpose into their domestic law the provisions of the EU’s fourth money laundering directive. This directive constituted a major advancement on its predecessor and included, specifically, a requirement to create centrally held registers of the beneficial owners of corporate entities. Another 2017 arrival on the UK statute books built upon the provisions of the then ground-breaking Bribery Act 2010 to create the UK’s second offence of failing to prevent wrong-doing by another. This time it was tax evasion that came within the crosshairs of the legislators as the failure to prevent tax evasion was criminalised in the Criminal Finances Act 2017.
The UK’s departure from the EU meant that several Acts and subsidiary legislation had to be amended. On a more than cosmetic scale, was the need for the UK to impose sanctions independently of the EU. This required the enactment of the Sanctions and Anti-money Laundering Act 2018. No longer being part of the EU, the UK also created its own list of high-risk countries for anti-money laundering purposes.
Notwithstanding its withdrawal from the EU, the UK implemented the fifth money laundering directive and did so by making amendments to the 2017 Money Laundering Regulations.
These developments have given rise to the following:
- The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
- Information about People with Significant Control (Amendment) Regulations 2017
- Criminal Finances Act 2017
- Policing and Crime Act 2017 (part 8 deals with the enforcement of financial sanctions and gives the Treasury power to issue penalties for sanctions breaches – more will be said about this below).
- Sanctions and Anti-Money Laundering Act 2018
- The Money Laundering and Terrorist Financing (Amendment) Regulations 2019
- The Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019
- The Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019
- The Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020 (regulation 5 of which inserted a requirement into the 2017 Money Laundering Regulations to report any discrepancies in the Persons of Significant Control register)
- Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021)
The exercise of the powers granted to the Treasury by part 8 of the Policing and Crime Act 2017 falls to the Office for Sanctions Implementation (OFSI). These powers were first used in 2019 when the bank Raphael and Sons PLC was fined £5,000 for dealing with funds belonging to a designated person without a licence. Since then, OFSI has acted on three further occasions and the size of the fines imposed has climbed steadily. In February of 2020 Standard Chartered Bank was fined £20.47m for making funds available to a designated person.
The pace of these developments is unlikely to diminish, and significant effort will be required to keep a clear focus on the ever-changing picture. Plenitude RegSight, our cloud-based obligations register, catalogues all Financial Crime related obligations. This subscription-based service allows firms to easily identify and assess policy compliance via the self-assessment tool and keep up to date with new regulations through our monthly horizon scanning service. Plenitude RegSight is the simplest and most effective way to manage Financial Crime Compliance obligations and support policy frameworks, providing ongoing assurance in a world of ever-increasing regulation and heightened regulatory scrutiny.
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