EU 4th DIRECTIVE: How do the extra responsibilities affect business?

The 26th of June 2017 sees new money laundering regulations take effect in the UK. HM Treasury says the clampdown will hit funding for organised crime and terrorism.

The regulation changes are part of the EU 4th Money Laundering Directive 2017.

Businesses must now become more responsible in their customer checks. It relates most to the way money gets sourced and used in criminal activities.

There is now a greater focus on financial risk assessment. That should make it more difficult for terrorists to move money. The UK business and finance sectors become more secure as the law changes take effect.

The economic secretary to the treasury confirmed the changes. He said terrorist financing and money laundering pose a significant threat to national security. HM Treasury seems determined to create a hostile environment for illicit finance.

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Business Affected by Money Laundering Regulations 2017

UK anti money laundering regulations apply most to these types of businesses:

• Auditors, External Accountants
• Casinos
• Credit and Financial Institutions
• Estate Agents
• High Value Dealers
• Independent Legal Professionals
• Insolvency Practitioners, and Tax Advisors
• Trust or Company Service Providers

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No More Automatic CDD Exemption

CDD exemption was an automatic process – following certain circumstances. But, companies now have to apply for exemption from enhanced ‘customer due diligence‘.

The CDD process assesses whether customers are likely to expose a company to a level of risk. These risks include money laundering and terrorist financing.

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Customer Due Diligence Thresholds

The new regulations will see the lowering of thresholds for customer identification.

That means CDD must now take place for anyone trading goods in cash with a value over £8,750 (10,000 euros). That is down from £13,120.

Casinos also see changes as the new money laundering regulations take effect in the UK. Gambling dens will need to perform extra CDD checks on their clients. Extra scrutiny must take place for anyone wanting to place a bet or collect winnings over £1,750 (€2,000 euros).

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In Depth Information on Beneficial Ownership

The new laws now affect the data given to government by big corporations. They will need to provide up-to-date information on the ultimate beneficial owner. This applies to anyone owning or controlling at least 25% of the company.

Storage of this updated information on beneficial ownership is likely to be in a centralised register. That means it would be accessible by banking institutions and law firms.

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British PEPs Facing Greater Scrutiny

Politicians and those with political authority will see a uniform approach. The implementation of the directive also brings in further enhanced measures. They will now affect British politically exposed persons (PEP).

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Industry Satisfied: Despite Technical Challenge Concerns

LexisNexis® Risk Solutions UK Ltd combine cutting-edge technology with unique data and analytics. Their data shows 73% of financial crime professionals are in favour. They believe the new rules will help firms make money laundering prevention easier.

The major concern is that terrorist funding networks are too complex. Companies and institutions will find it difficult to tackle them alone.

Combating the financing of terrorism (CFT) and effective anti-money laundering (AML) need tough legislation. Even so, a greater emphasis relates to big data and machine learning-powered tools. They can identify transactional patterns that even intelligent human would fail to spot.

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