Bribery, Fraud And Anti-Money Laundering | UK Regulatory Outlook May 2024

HM Treasury has published its 2022-23 report on anti-money laundering and counter-terrorist financing (AML/CTF) supervision, detailing the activities of AML and CTF supervisors – HMRC...
UK Criminal Law
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HM Treasury publishes AML/CTF supervision report

HM Treasury has published its 2022-23 report on anti-money laundering and counter-terrorist financing (AML/CTF) supervision, detailing the activities of AML and CTF supervisors – HMRC, the Financial Conduct Authority (FCA), the Gambling Commission, and the 22 legal and accountancy professional body supervisors. Among the key points arising are:

  • approximately 10% of all regulated businesses were identified as high-risk by supervisors, in line with previous years;
  • the total sum of fines across all 25 supervisors was £197,000,000 compared to £504,000,000 in 2021-22, however the report notes this is largely due to fewer large fines by the FCA;
  • the FCA imposed the highest fines on average (£19.4 million), followed by the Gambling Commission (£2.8 million), compared with HRMC (£7,000) and the professional body supervisors' (£4,000);
  • the FCA's view was that retail banking, wholesale banking, wealth management and crypto-asset firms were most at risk to financial crime and exploitation for money laundering;
  • the HMRC identified money services businesses, art market participants, and the trust and company service providers as presenting the highest risks for money laundering; and
  • common failings identified include inadequate risk assessments which do not fully address all of the risks present, inadequate staff training leading to poor knowledge or understanding of the regulations and inadequate documentation of policies and procedures.

As previously reported, HM Treasury is currently consulting on reforms to improve the effectiveness of the Money Laundering Regulations 2017 (MLRs). With the general election that will take place on 4 July 2024, the consultation on the MLRs may be extended, given the restrictions on publicity during the election period. HM Treasury is also due to publish its response to its 2023 consultation on reforming the UK's AML/CTF regulatory and supervisory framework (see more in our Insight). The government's second three-year economic crime plan sets out how it intends to continue its work on reducing money laundering, sanctions evasion, fraud and recovering more criminal assets (for further details see our Insight).

Labour's David Lammy has said in a keynote speech at the Institute for Public Policy Research (IPPR) on 21 May 2024, that, if elected Labour plans to introduce a package of measures to tackle corruption and money laundering. This includes collaborating with the private sector in taking action against professional enablers and kleptocrats, creating best practice for anti-money laundering regulation and supervision, and boosting corporate transparency of trusts through regular reporting requirements.

Following the election, the new Parliament will convene on 9 July 2024. On 17 July, the State Opening and a King's Speech will set out the new government's agenda for the coming Parliamentary session. Our Insight looks at the legislation dealt with during the wash-up period ahead of the general election.

JMLSG consults on revisions to AML/CTF guidance

The Joint Money Laundering Steering Group (JMLSG) has launched a consultation on its proposed amendments to Sector 18 (Wholesale markets) in Part II of its AML/CTF guidance for the financial services sector.

The proposed revisions include:

  • customer due diligence: a new subsection on authorised personnel acting on behalf of customer; and
  • a new section on wholesale subscription finance in private capital funds.

The consultation closes on 1 July 2024. See the press release.

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.

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