Money Laundering Changes
Nov 23, 2007
Author: Peter Collier

Many have stopped allowing customers to pay for high value goods such as cars in cash and most people are aware of the requirement to produce ID when opening a bank account. On 15th December the Money Laundering Regulations 2007 come into force.

Peter Collier, a partner in our Commercial and Property Development department and the firm’s Money Laundering Reporting Officer says: “The new rules build on the existing money laundering rules and they implement an EU directive in this field. The regulations:

- provide more detailed obligations regarding customer due diligence, for example, explicit requirements for firms to undertake ongoing monitoring of business relationships and for firms to identify not just the customer but the beneficial owner of the customer;
- require firms to vary customer due diligence and monitoring according to the risk of money laundering or terrorist financing;
- require firms to take enhanced customer due diligence measures in higher risk situations, but also allow firms to take reduced identification measures for specific situations with a lower risk of money laundering;
- allow firms to rely on certain other firms for undertaking customer identification; and
- clarify the arrangements for the supervision of firms, including those that will be supervised for the first time.

The regulations apply to the following types of businesses. Most UK financial firms (banks, building societies, money transmitters, bureaux de change, cheque
cashiers, savings and investment firms) are covered. In addition, the Regulations cover legal professionals (when undertaking some activities) accountants, tax advisers, auditors, insolvency practitioners, estate agents, casinos, high value dealers when dealing in goods worth over 15,000 Euro and trust or company service providers.
The Office of Fair Trading becomes a “Supervisory Authority” on 15 December 2007 when the regulations come into effect. Businesses supervised by the OFT are consumer credit lenders who are not authorised by the FSA and estate agents. Monitoring and enforcement powers will be shared with local authority Trading Standards Services (TSS) under arrangements to be negotiated in coming months. Local estate agents and credit providers who need advice on the regulations should contact us for further information.

The OFT has issued guidance to alert businesses to their obligations under the regulations and which is aimed at reducing their chance of being used for money laundering. Firms are required to:
• verify customers identity and nature of business before entering into business relationships or transactions
• train staff in the procedures and laws relating to anti-money laundering
• keep records of customer identity and business relationships for five years, and
• report suspicious activity to the Serious Organised Crime Agency.
If you want advice on how the new regulations may apply to you contact us for further information Peter Collier on 01494 521301.
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