Money Laundering Regulations 2017
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The Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017, often referred to as the Money Laundering Regulations 2017 (MLR), is a set of regulations in the UK that were introduced to combat money laundering and the financing of terrorism by imposing legal obligations on various businesses and professions to implement anti-money laundering measures.
Risk-based approach: Firms must adopt a risk-based approach to anti-money laundering measures, assessing and mitigating the risks of money laundering and terrorist financing based on their specific circumstances.
Customer due diligence: Firms are required to perform customer due diligence when establishing a business relationship or carrying out occasional transactions. This includes identifying and verifying the identity of clients and beneficial owners, assessing the purpose and nature of the business relationship, and conducting ongoing monitoring of clients.
Enhanced due diligence: In higher-risk situations, such as dealing with politically exposed persons or in high-risk jurisdictions, enhanced due diligence measures must be applied. This involves obtaining additional information, conducting more thorough checks, and implementing stricter monitoring procedures.
Record keeping: Firms must maintain records of customer due diligence measures, transactions, and other relevant documentation for a period of at least five years.
Risk assessment and policies: Firms must conduct regular risk assessments to identify and understand the money laundering and terrorist financing risks they face. They must develop and implement policies, controls, and procedures to mitigate those risks effectively.
Training and awareness: Firms are required to provide training to staff on anti-money laundering and terrorist financing, ensuring employees understand their obligations and can recognise and report suspicious activities.
Politically exposed persons: Firms must have systems and procedures in place to identify and manage the risks associated with politically exposed persons, including senior management approval, enhanced ongoing monitoring, and establishing the source of wealth and funds involved in the business relationship.
Beneficial ownership: Trustees of relevant trusts are required to maintain accurate records of beneficial owners and potential beneficiaries. They must also provide information about the trust's beneficial ownership to relevant parties and to HMRC.
Internal controls and audit: Firms must establish appropriate internal controls, appoint a person responsible for compliance with the MLR 2017, and conduct independent audits to assess the adequacy of their policies, controls, and procedures.
Reporting suspicious activity: Firms have an obligation to report suspicions of money laundering or terrorist financing to the appropriate authorities, such as the National Crime Agency.
Data protection: Firms must ensure that their record-keeping and data protection systems, policies, and procedures comply with the requirements of the MLR 2017, including the retention and processing of personal data.
Non-compliance with the MLR 2017 can result in penalties, including fines, reputational damage, and loss of business opportunities. It is important for firms to understand and fulfil their obligations under the regulations to prevent money laundering and terrorist financing effectively.
Risk-based approach: Firms must adopt a risk-based approach to anti-money laundering measures, assessing and mitigating the risks of money laundering and terrorist financing based on their specific circumstances.
Customer due diligence: Firms are required to perform customer due diligence when establishing a business relationship or carrying out occasional transactions. This includes identifying and verifying the identity of clients and beneficial owners, assessing the purpose and nature of the business relationship, and conducting ongoing monitoring of clients.
Enhanced due diligence: In higher-risk situations, such as dealing with politically exposed persons or in high-risk jurisdictions, enhanced due diligence measures must be applied. This involves obtaining additional information, conducting more thorough checks, and implementing stricter monitoring procedures.
Record keeping: Firms must maintain records of customer due diligence measures, transactions, and other relevant documentation for a period of at least five years.
Risk assessment and policies: Firms must conduct regular risk assessments to identify and understand the money laundering and terrorist financing risks they face. They must develop and implement policies, controls, and procedures to mitigate those risks effectively.
Training and awareness: Firms are required to provide training to staff on anti-money laundering and terrorist financing, ensuring employees understand their obligations and can recognise and report suspicious activities.
Politically exposed persons: Firms must have systems and procedures in place to identify and manage the risks associated with politically exposed persons, including senior management approval, enhanced ongoing monitoring, and establishing the source of wealth and funds involved in the business relationship.
Beneficial ownership: Trustees of relevant trusts are required to maintain accurate records of beneficial owners and potential beneficiaries. They must also provide information about the trust's beneficial ownership to relevant parties and to HMRC.
Internal controls and audit: Firms must establish appropriate internal controls, appoint a person responsible for compliance with the MLR 2017, and conduct independent audits to assess the adequacy of their policies, controls, and procedures.
Reporting suspicious activity: Firms have an obligation to report suspicions of money laundering or terrorist financing to the appropriate authorities, such as the National Crime Agency.
Data protection: Firms must ensure that their record-keeping and data protection systems, policies, and procedures comply with the requirements of the MLR 2017, including the retention and processing of personal data.
Non-compliance with the MLR 2017 can result in penalties, including fines, reputational damage, and loss of business opportunities. It is important for firms to understand and fulfil their obligations under the regulations to prevent money laundering and terrorist financing effectively.
