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UK and EU AML Regulations: A Comparative Analysis

In the wake of the UK’s departure from the European Union, a new landscape has emerged for anti-money laundering (AML) regulations in the country. As part of its domestic regulation, the UK has implemented its own AML controls, which differ from those of the EU. This article provides an overview of the key differences and similarities between the two sets of regulations.

EU’s Anti-Money Laundering Directive

The EU’s main piece of legislation governing AML is the Anti-Money Laundering Directive (AMLD), which has undergone several updates over the years. The most recent iteration, 6AMLD, came into force in June 2021 and introduced a harmonized definition of money laundering across all EU countries, as well as increased penalties for money laundering offenses.

UK’s AML Regulations

In contrast, the UK’s AML regulations are primarily governed by domestic legislation, including:

  • The Proceeds of Crime Act (POCA)
  • Terrorism Act 2000
  • Terrorism Act 2006
  • Sanctions and Anti-Money Laundering Act (SAMLA)

The UK has also introduced its own sanctions regime, which allows it to impose sanctions independently of the EU.

Key Differences

There are several key differences between the two sets of regulations:

  • Scope of criminal liability: Under 6AMLD, legal persons (such as companies and partnerships) can be held criminally liable for money laundering offenses. In contrast, under UK law, only individuals can be prosecuted for such offenses.
  • Threshold for imposing sanctions: The EU’s sanctions regime has a higher threshold for imposing sanctions, whereas the UK’s SAMLA introduces a lower threshold and enables the UK to freeze assets.

Common Goals

Despite these differences, both sets of regulations share common goals:

  • Adoption of know-your-customer (KYC) practices by financial institutions
  • Taking a risk-based approach to AML
  • Reporting suspicious transactions
  • Performing additional checks on politically exposed persons (PEPs)

FATF Recommendations

As a member of the Financial Action Task Force (FATF), the UK is also subject to its Recommendations, which are internationally endorsed global standards against money laundering and terrorist financing. The FATF’s Recommendations require participating countries to outlaw money laundering and financial institutions to take action against financial crime.

Conclusion

While there are significant differences between the EU and UK AML regulations, both sets of regulations share common goals and requirements. Financial institutions operating in the UK should seek to fully comply with the requirements of the UK’s domestic legislation, as well as the FATF Recommendations, in order to protect their customers and business interests.

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