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UK Banking Regulations Tighten Grip on Financial Crime Prevention
As part of its ongoing efforts to combat money laundering and terrorist financing, the United Kingdom has introduced several key legislative changes aimed at strengthening financial crime prevention.
Enhanced Due Diligence on Domestic Politically Exposed Persons (PEPs)
The latest development comes with the introduction of the Money Laundering and Terrorist Financing (Amendment) Regulations 2023, which takes effect from January 10, 2024. The regulations require enhanced due diligence on domestic PEPs, a measure designed to reduce the risk of financial crime.
Historical Amendments
This move follows a series of amendments made to the original Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which set out the main anti-money laundering requirements for firms. The subsequent Money Laundering and Terrorist Financing (Amendment) Regulations 2019 and 2020 further refined these regulations to address emerging threats.
Ongoing Consultations
In addition to these changes, the UK government has also consulted on improving the effectiveness of its money laundering regulations from March 11 to June 9, 2024. The consultation aims to gather feedback from industry stakeholders and experts on ways to enhance the country’s anti-money laundering framework.
Key Pieces of Legislation
Other key pieces of legislation affecting financial crime prevention in the UK include:
- Proceeds of Crime Act 2002: sets out the main requirements for reporting suspicious activity to the National Crime Agency (NCA) and related offenses
- Terrorism Act 2000: sets out the main requirements for reporting suspicious activity to the NCA and related offenses
- Economic Crime Act 2022: introduced several measures aimed at tackling economic crime, including a register of overseas entities holding UK real estate, strengthened unexplained wealth orders, and a strict civil liability test for monetary penalties for sanctions enforcement
- Economic Crime and Corporate Transparency Act 2023: introduces a range of reforms aimed at tackling economic crime, including measures to prevent the creation of fraudulent companies and additional powers to seize and recover suspected criminal cryptoassets
Sanctions Regime Strengthened
The UK’s sanctions regime has also been strengthened through the Sanctions and Anti-Money Laundering Act 2018. The act provides the legal basis for imposing, updating, and lifting sanctions.
Criminal Justice Bill
A criminal justice bill is currently making its way through Parliament, which includes economic crime measures aimed at tackling fraud and money laundering.
Independent Review of Disclosure and Fraud Offences
An independent review of disclosure and fraud offences has been published, highlighting concerns around the effectiveness of the current regime. The review suggests that better training and resources are needed across all parts of the criminal justice system to address these issues.
Conclusion
As the UK continues to grapple with the evolving threat of financial crime, these legislative changes and consultations demonstrate the government’s commitment to staying ahead of the curve and protecting its citizens from the scourge of money laundering and terrorist financing.