Financial Crime World

UK’s Anti-Money Laundering Requirements: A Comprehensive Guide

The United Kingdom has a robust financial sector that is heavily regulated to combat money laundering and terrorist financing. The country’s anti-money laundering (AML) requirements are outlined in the Senior Management Arrangements, Systems and Controls section of the Financial Conduct Authority (FCA) Handbook.

Regulated Sector

Businesses operating in the following sectors are subject to AML requirements:

  • Credit institutions
  • Financial institutions
  • Auditors
  • Insolvency practitioners
  • External accountants
  • Tax advisers
  • Independent legal professionals
  • Trust or company service providers
  • Estate agents
  • Letting agents
  • High-value dealers
  • Casinos
  • Art market participants
  • Crypto-asset exchange providers
  • Custodian wallet providers

Supervisory Authorities

The following supervisory authorities act under the Proceeds of Crime Act 2002 (POCA) and the Regulations:

  • Financial Conduct Authority (FCA)
  • HM Revenue & Customs (HMRC)
  • The Gambling Commission
  • 22 other professional bodies

These authorities have the power to take civil or criminal action against businesses that fail to comply with AML requirements.

AML Requirements

Regulated firms must:

  • Conduct risk assessments
  • Implement appropriate policies and procedures
  • Know their customers
  • Address guidance given by their regulators
  • Ensure directors and senior managers have practical responsibility for organizing and controlling the firm’s affairs in accordance with FCA principles

Criminal Sanctions

Offences under POCA or the Regulations can result in:

  • Unlimited fines
  • Up to 14 years’ imprisonment for individuals convicted of money laundering activity
  • Fines and compensation orders for corporations found guilty of AML offences

Appeals

Decisions by supervisory authorities can be appealed to:

  • The High Court
  • The Upper Tribunal

Each authority will publish its decisions unless there is a good reason for this not to take place.

Recent Developments

The UK’s AML requirements have been strengthened in recent years, with new regulations introduced to address the risks associated with crypto-assets and other emerging threats. The FCA has also increased its scrutiny of financial institutions’ AML controls, imposing significant fines on those that fail to comply with regulatory expectations.

In conclusion, the UK’s anti-money laundering requirements are designed to protect the country’s financial system from money laundering and terrorist financing. Regulated firms must ensure they comply with these requirements, as failure to do so can result in criminal sanctions and reputational damage.