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UK Anti-Money Laundering Regulations Tighten Grip on High-Risk Countries

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London - The UK’s Fight Against Financial Crime Intensifies

The United Kingdom has strengthened its efforts to combat money laundering and terrorist financing by introducing stricter regulations on businesses operating in high-risk countries. The new rules, outlined in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, require firms to apply enhanced customer due diligence measures on customers from jurisdictions deemed “high-risk”.

What are High-Risk Countries?

The Financial Action Task Force (FATF), a global standard-setter for anti-money laundering and counter-terrorism financing, has identified several countries as high-risk due to their inadequate anti-money laundering frameworks. These countries include:

Bulgaria
Burkina Faso
Cameroon
Democratic Republic of the Congo
Iran
Namibia

Regulations Apply to UK Businesses

The new regulations require UK businesses operating in these high-risk jurisdictions to implement enhanced customer due diligence measures, including:

Conducting thorough background checks on customers
Verifying the identity of customers
Monitoring transactions for suspicious activity
Reporting any suspicious activity to the relevant authorities

Firms Must Ensure Branches and Subsidiaries Comply

The regulations also require UK businesses with branches or subsidiaries in high-risk countries to ensure that they implement measures equivalent to those required by UK law. This means that firms must take steps to prevent money laundering and terrorist financing at all levels of their operations.

HM Treasury Warns Businesses to Take Action

In response to the new regulations, HM Treasury has issued a warning to businesses operating in high-risk jurisdictions, urging them to review their policies and procedures to ensure compliance with the new rules. The government’s strategy is to use financial tools to deter crime and terrorism, detect it when it happens, and disrupt those responsible.

Background Information

The Financial Action Task Force (FATF) is an inter-governmental body established by the G7 in 1989 and today includes as members 38 jurisdictions and two regional organisations. The government’s strategy is to use financial tools to combat financial crime, detect it when it happens, and disrupt those responsible.

What This Means for Businesses

The new regulations represent a significant tightening of anti-money laundering rules in the UK. Businesses operating in high-risk countries must ensure that they have robust policies and procedures in place to prevent money laundering and terrorist financing. Failure to comply with the regulations can result in severe penalties, including fines and reputational damage.

For more information on how to subscribe to financial crime alerts, please visit GOV.UK.