UK: John Binns Analyses Post-Brexit Anti-Money Laundering Law

Last Updated: 16 August 2019
Article by John Binns

What effect will Brexit have on the UK's anti-money laundering and counter-terrorist financing laws?

As an EU member state, the UK has drawn at least a large part of its anti-money laundering (AML) and (CTF) regulations from the provisions of the Money Laundering Directives (MLDs), which have needed to be transposed into domestic Regulations by HM Treasury (HMT) under the European Communities Act 1972 (ECA 1972). The latest (and possibly last) example of that was the Fourth Anti-Money Laundering Directive (EU) 2015/849 (MLD4), which the UK transposed into the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (MLR 2017). The Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) effectively provides for a new power for HMT to use to amend or replace MLR 2017, once the UK is no longer bound by EU law.

Will the UK still have to comply with MLD5, even after Brexit?

The EU has since passed the Fifth Anti Money Laundering Directive (EU) 2018/843 (MLD5) and the Sixth Anti-Money Laundering Directive (EU) 2018/1673 (MLD6), though the deadlines for implementing them have not yet arrived. Meanwhile, the UK government has negotiated a draft withdrawal agreement with the EU, which contains provisions that would oblige it to continue to apply EU laws during a transition period, and jointly agreed a (non-binding) political declaration, paragraph 84 of which makes clear that the EU and the UK would continue to work together on AML issues after Brexit.

HMT then consulted on the transposition of MLD5 on the assumption that the withdrawal agreement would take effect, so that the UK would be bound to comply with it. On that basis it proposed tightening up MLR 2017 in various ways. These include a significant expansion of the range of businesses that will have to apply them, including in the virtual or crypto-currencies sector, letting agents in some circumstances, and art intermediaries in free ports. They also include measures to expand the scope and availability of registers of beneficial ownership.

What will the UK do in the event of a 'No deal' Brexit?

At the time of writing, it is not clear whether the draft withdrawal agreement or any variant of it will be ratified in the event that the UK leaves the EU. If not (ie a 'No deal' Brexit), or if a variant of that agreement does not include a transition period that includes the implementation deadlines for MLD5, the UK will have a choice to make about whether and to what extent it complies with it.

So far, there has been no specific indication from the government about this. Certainly, the UK has historically been as tough or tougher on AML laws than the MLDs have required, and the government's rhetoric on economic crime is such that the UK might comfortably expect it to continue to follow that path. However, it is inarguable that at least some aspects of MLD5 constitute increased burdens on the private sector (art intermediaries in free ports being a topical example see LNB News 02/08/2019 48), while the obligations on the state itself (chiefly, to build the architecture for sharing beneficial ownership information) are not trivial. So, there is at least some potential for debate about whether to implement these provisions, should the UK have no obligation to do so.

One practical difficulty with having such a debate, however, is timing. The UK is due to leave the EU on 31 October 2019, and in the event of a 'No deal' Brexit, there may be other things on the government's agenda than MLD5, while the deadline for EU member state to implement it is only a couple of months after that, on 10 January 2020. If the UK has left without a deal, of course, this deadline won't be binding on it. However, due to the practical impact of diverging from EU laws, a decision not to enact those provisions by then would be significant, and the pressure of timing is likely to weigh in favour of doing so as originally planned.

Does MLD6 matter to the UK?

MLD6 is less of a worry for the UK, because UK laws already comply with the vast majority of it (including, for instance, an obligation to prohibit laundering of the proceeds of specified predicate offences—the UK's laws already apply to literally any predicate offence. But there is one intriguing exception, in the form of a requirement to make corporate entities vicariously liable for acts of money laundering committed for their benefit by an individual in a leading position, or which have been made possible by a lack of supervision or control by such an individual.

The UK's laws on corporate liability are very roughly consistent with the first of these categories, but not at all with the second, which looks more like the extended 'failure to prevent' model that has been sitting in the in-tray of the Ministry of Justice for some years. So, it will be intriguing to see whether the government finds time to enact a new corporate offence of failing to prevent money laundering before the MLD6 transposition deadline of 3 December 2020.

Again, whether the UK is bound to do this after leaving the EU depends on what, if any, withdrawal agreement applies. In the current version, that deadline falls narrowly within the transition period. But in the event of 'No deal', the UK would again have a choice (as it would for any and all future MLDs, which of course, by then, the UK would have no hand in drafting) on whether to remain aligned with the EU or not. In practical terms, the impact is in whether the UK is treated as an equivalent jurisdiction for the purposes of due diligence obligations— whether, for instance, a bank in France is entitled to assess the risks of, or require documentation and information from, a UK customer to roughly the same standard as one from an EU member state. Ultimately, it is the value of that equivalence status that will need to be weighed up against the burdens of complying with MLDs generally, as the UK 'takes back control.'

This article was originally published by LexisNexis on 13th August 2019. You can read the full article here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions