You can use the search function to find a range of UK Finance material, from consultation responses to thought leadership to blogs, or to find content on a range of topics from Capital Markets & Wholesale to Payments & Innovation.
On 1 September 2022, changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) took effect.
The key measures include:
Changes to beneficial ownership transparency: a revised approach to discrepancy reporting
From 1 April 2023, the amended MLRs will also oblige firms to report ‘material’ discrepancies in beneficial ownership information at all stages of the customer lifecycle (i.e., on an ongoing basis), rather than just at onboarding. A material discrepancy will be newly defined to only include those discrepancies which may reasonably be considered linked to money laundering or terrorist financing, or to conceal details of the business of the customer. In addition, firms will be required to obtain an excerpt of the relevant register as part of the customer due diligence process.
Separately, changes to include certain trusts within the scope of discrepancy reporting requirements have now taken effect, and firms are required to obtain proof of a trust’s registration on the Trust Registration Service (TRS), and report discrepancies, prior to establishing a business relationship. From 1 April 2023, this obligation will also extend to all stages of the customer lifecycle.
What this all means
All these changes to the MLRs should prompt firms to perform a gap analysis against their existing internal policies and processes.
While there is no need to conduct a standalone proliferation financing risk assessment, there should be a focus on ensuring existing business-wide risk assessments are sufficiently robust to account for proliferation financing risk (as it is now defined in the MLRs). Training and further guidance to staff will also likely be needed.
Firms should also be seeking to ensure their systems are appropriately calibrated to the new discrepancy reporting obligations. Cryptoasset firms captured by the new ‘travel rule’ will need to assess and understand the new requirements and explore possible technological solutions.
Economic crime reform: finally shaping up?
With the recent introduction of the ‘Economic Crime and Corporate Transparency Bill’ into Parliament, the UK government has signalled that further, substantive regulatory reforms are coming.
The Bill would make long-awaited reforms to the operations of Companies House, including strengthening the integrity of its data holdings; introduce reforms to combat the abuse of limited partnerships; facilitate private sector information sharing; and strengthen law enforcement powers to seize cryptoassets.
A new and improved public/private Economic Crime Plan is also due soon, which could add further impetus.
Either way, it’s clear we are now entering a period of change in the UK’s regulatory framework for combatting economic crime, and firms should be ready to respond.
Neal.Dawson@kpmg.co.uk Simon.Ward@kpmg.co.uk
11.01.23
Neal Dawson, Director, FS Forensic, KPMG UK
Simon Ward, Senior Manager, FS Forensic, KPMG UK
21.02.23
By downloading this document, you understand and agree that any sharing, distribution or republishing of the content, without prior written authorisation from the author or content managers at UK Finance, shall be constituted as a breach of the UK Finance website terms of use.