The Fourth Money Laundering Directive - Thistle Compliance anti money laundering cases

The Fourth Money Laundering Directive – Thistle Compliance anti money laundering cases

The fourth money laundering directive is a european union directive, which was passed in june 2015. It is based primarily on the 40 recommendations laid out by the financial action task force (FATF) in 2012 and is due to be implemented in the UK by 26th june 2017. What will happen?

The main changes are as follows: customer due diligence

The fourth money laundering directive (4MLD/the directive) will update the current list of circumstances where SDD (simplified due diligence) will apply and will remove the ability to apply SDD to financial institutions which are:

• • themselves subject to the MLR 2007 or equivalent,

• • companies whose securities are listed on a regulated recognised market

• • UK public authorities from the categories of clients to be regarded as posing a lower risk.

Central register of beneficial ownership

4MLD requires that member states should ensure that corporate and other legal entities incorporated within their territory are required to obtain and hold adequate, accurate and current information on their beneficial ownership, including the details of the beneficial interests held.Anti money laundering cases

Such information should be held on a central register accessible to competent authorities. The scope of the directive is broad in that the requirements apply to express trusts and other legal entities rather than just companies. Politically exposed persons (PEP)

The 4MLD:

• • widens the existing definition of peps from foreign individuals who occupy prominent public positions to include domestic individuals occupying similar roles – such as UK mps

• • there will no longer be a difference between domestic and foreign peps and EDD (enhanced due diligence) will always apply.

One-off transactions

The one-off transactional limit was under the MLR2007 set at €15,000. Under 4MLD this threshold will be reduced to €10,000. Beyond this limit, regulated firms are now required to complete due diligence. Absolute turnover threshold

The current turnover threshold for persons engaging in financial activity on an occasional or very limited basis will be increased to £100,000.Anti money laundering cases government consultation fund transfer regulation (aka the wire transfer regulation)

The fund transfer regulation (FTR) accompanies the directive, it updates the rules on information on payers and payees accompanying transfers of funds in any currency where at least one of the payment services providers involved is established in the EU. It states that a payment services provider must verify certain elements of information for a transaction of any value where it has received the funds in cash or in anonymous electronic money. General observations

Regulated firms need to complete risk assessments on all products to assess their exposure to 4MLD changes. The issues highlighted will then need to be revisited during the relationship on an annual basis to ensure that these risks and any controls remain sufficient.

Additional upcoming regulatory changes are set out below the criminal finances bill

anti money laundering cases

The criminal finances bill was introduced to the house of commons on 13 october 2016. It is currently being reviewed by parliament and several industry experts are projecting that it will potentially go live in autumn 2017.

It will cover the following areas:

• • unexplained wealth orders

• • disclosure orders

• • sars and the request for information power

• • information sharing

• • seizure powers

• • POCA

• • terrorist financing

• • tax evasion

Office of financial sanctions implementation (OFSI) consultation

From april 2017, the treasury’s office of financial sanctions implementation (OFSI) will be able to impose penalties for serious sanctions breaches of up to £1 million or 50% of the value of breach, whichever is higher. Fifth money laundering directive

The 5 th money laundering directive (5MLD) was released in late october 2016, the key changes include:

• • updating the definitions of ‘virtual currency’ and ‘custodian wallet provider’, which could bring more providers under the scope of the directive

anti money laundering cases

• • reducing the threshold on identifying holders of pre-paid cards to €150 (from €250) and a requirement to conduct CDD on remote payment transactions over €50

• • additional due diligence measures by banks on financial flows from risky non EEA countries

• • beneficial ownership information relating to companies and trusts engaged in economic activities for the purpose of profit to be made publicly available

• • beneficial ownership information relating to trusts not engaged in such activities to be available to upon demonstrating a legitimate interest.

How we can help

In light of the expected changes, it may be useful for you to obtain FCA compliance adviceto ensure your firm meets the FCA’s expectations. Thistle initiatives offers numerous FCA compliance support solutions which can be tailored to your business’ specific requirements. Our team can help to ensure you are kept up to date with the latest regulatory developments and their possible impact on your firm.Anti money laundering cases

If you would like further information on how thistle can help you to ensure you are metting your FCA regulatory obligations, please contact us on 020 7436 0630 or email us on info@thistleinitiatives.Co.Uk