The Money Laundering (Amendment) Regulations 2012 – Amendments to the Money Laundering Regulations 2007 came into force on 1 October 2012, but what effect will these have on practitioners? The answer in most cases is likely to be ‘little or none’.

It is now five years since the Money Laundering Regulations 2007 were introduced. HM Treasury believe that the regulations should be reviewed and updated as necessary every five years. The Money Laundering (Amendment) Regulations 2012 are the product of the first of these five-yearly reviews – but very little change has been made.

Estate Agents
Previously an estate agent operating in the UK, but who dealt in properties situated overseas, was not subject to the MLR 2007. Previously an estate agent operating in the UK, but who dealt in properties situated overseas, was not subject to the MLR 2007. That has been changed by way of a new definition of “estate agency work” in new regulation 3(11A). However it remains the case that letting agents do not fall within the scope of the MLR.

Short term credit agreements
At the same time the regulations now make clear that a business whose only listed activity is the provision of fixed term credit by way of payments deferred by not more than 12 months does not thereby fall within the MLR regime.

Reliance – accountants and lawyers
there is a minor simplification and relaxation of the rules relating to members of the various different professional bodies
In terms of the scope to rely on customer due diligence carried out by another practitioner, there is a minor simplification and relaxation of the rules relating to members of the various different professional bodies and a consequent redrafting of Schedule 3 to the 2007 regulations.

Supervisory bodies
The remainder of the amendments relate to increasing the powers of supervisory bodies and allowing the different supervisors to share information with each other. So HMRC are now allowed wider scope to take matters into consideration for the purpose of deciding whether a person is “fit and proper”, and in consequence MLR 2007 regulations 28(2) and (3) have been removed.

Changes not made

the government have not, after all, abolished the criminal penalties for breaches of the MLR 2007 – The government had considered, and consulted on, some changes to the MLR 2007 that have not in the event been made. In particular the government have not, after all, abolished the criminal penalties for breaches of the MLR 2007.

The government had also considered exempting some very small businesses from the need to comply with MLR 2007, but has not done so.

A proposed addition to the wording of Regulation 19 relating to the keeping of records of identity of beneficial owners also did not make it into the final version of the amendments.

The future

Work is well advanced a new EU Money Laundering Directive. In practice however most of the ‘new’ requirements of this directive are already found in UK law (not least because the UK has adopted an ‘all crimes’ approach which entails a much wider definition of ‘money laundering’ in the UK than in most other countries, both within and outside the EU).

the most significant change which the new directive will bring in the UK is likely to be a widening in the definition of ‘Politically Exposed Person’
In consequence the most significant change which the new directive will bring in the UK is likely to be a widening in the definition of ‘Politically Exposed Person’. At present a PEP is defined by reference to a person’s role outside the UK. At some stage the legislation is likely to be amended so that it will apply equally to persons having a role within the UK.

Other than that the new directive, when it is finalised, is likely simply to require other EU member states to adopt money laundering regulations closer to those already in operation in the UK.