Changes to the UK anti-money laundering regime came into force on 10 January 2020,implementing the EU's Fifth Anti-Money Laundering Directive and Financial Action Task Force recommendations (the "2019 Amendments").Whilst the regulations mainly cover new types of businesses (for example, crypto asset exchange providers, certain letting agents and art market participants), there are some new and amended customer due diligence requirements. Our view is that most financial institutions will already cover most of these, now mandatory, requirements in their internal compliance policies. We have summarised the changes implemented by the 2019 Amendments that may impact, specifically, financial institutions:
Beneficial ownership and control: firms are required to take reasonable measures to understand the ownership and control structure of their corporate customers, and record any difficulties encountered in identifying beneficial ownership. Many relevant persons will already be including these checks in their policies and these checks are now mandatory.
Reporting discrepancies to Companies House: there is now an obligation to tell Companies House if there is a discrepancy between information that a regulated entity holds about a beneficial owner and information which is on the people with significant control ("PSC") register held at Companies House. The report is made to Companies House, who will investigate the discrepancies. Companies House have said 'This will bolster the measures we've already taken to improve the integrity of our PSC data'.
Enhanced Due Diligence (EDD): Regulated persons must also take into account additional high-risk factors when assessing whether EDD is required – for example where either of the parties to a relevant transaction is established in a high-risk third country or where the transaction relates to items such as oil, arms, precious metals or tobacco products.
Duty on credit institutions to respond to requests for information on accounts: the 2019 Amendments require the government to establish a portal for the UK's Financial Intelligence Unit to access details relating to UK bank accounts, credit union accounts and safe-deposit boxes. There is no additional requirement on credit institutions to collect data but there is a duty on banks and other credit institutions to maintain systems which enable those institutions to respond to requests made via this central automated mechanism.