There are over 100,000 businesses within scope of the money laundering regulations in the United Kingdom. These regulations require businesses to know their customers, manage their risks, and of course, know who regulates them!
With so many professional bodies each having their own money laundering supervisory responsibilities, you’re not alone if you’re uncertain about who you’re accountable to – and what you need to do to be compliant.
Money laundering regs apply to businesses of all sizes and a growing number of sectors
First off, it’s important to know that the money laundering regulations apply to businesses of all sizes.
There is no exemption for small businesses. And no action is proposed to minimise regulatory burdens on small businesses. Ignorance or size is not an excuse for non-compliance.
Whether you’re a financial institution, high value dealer, estate agent or lawyer, you should have heard a lot of noise over the last 18 months or so about the Fifth Money Laundering Directive – or 5MLD.
This directive has been transposed into UK law in the form of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019.
The changes in regulation affect a raft of new sectors
The changes, among other things, mean a whole raft of new businesses now need to comply with the regs, including letting agents, art market participants (including operators of free ports), and providers of exchange or storage services for cryptoassets, such as virtual currencies. The definition of tax adviser is also extended to those who provide material aid or assistance on tax.
The changes arising from 5MLD have left many businesses uncertain over who regulates them and what they need to do to be compliant.
Understand AML regulation with our infographic
For this reason, we have created this infographic as a handy reference for you. It’s easy to understand and covers all of the sectors that fall under the money laundering regulations. Not only can you see under which regulator your industry falls, but you can also see at a glance that the regulatory landscape is far from simple.
A – Z sector guide to regulators in the UK
The following are all supervised by the Office for Professional Body Anti-Money Laundering Supervision (OPBAS):
Banks, building societies and credit institutions
This broad category includes firms undertaking varied financial activity, including investment managers and stockbrokers, e-money institutions, payment institutions, consumer credit firms offering lending services, financial advisors, investment firms, asset managers, and those providing safety deposit services.
All such businesses are supervised by the FCA.
You need to register with one of the following:
All casinos are regulated by the Gambling Commission. The Gambling Commission does not regulate other licensed gambling operators (bookmakers etc) but any business with a gambling license must adhere to the Proceeds of Crime Act 2002.
There is an obligation on these businesses to detect and report any known or suspected money laundering to the National Crime Agency (NCA).
Not to do so is a criminal offence.
You will need to be registered with the FCA. This category includes cryptoasset exchange providers, cryptoasset automated teller machines (ATM), custodian wallet providers, peer to peer providers, issuers of new cryptoassets, eg Initial Coin Offering (ICO) or Initial Exchange Offering (IEO), and publication of open-source software eg Non-Custodian Wallet providers.
• High street residential estate agents
• Commercial estate agents
• Online estate agents
• Property or land auctioneers
• Land agents
• Relocation agents, property finders, private acquisitions specialists
• A sub-agent providing estate agency services to a main estate agency business
• Asset management businesses that also provide estate agency services
• Business brokers or transfer agents brokering the sales or transfer of client businesses to third parties
• Social housing associations that offer estate agency services
• Letting or property management agents that offer estate agency services to landlord customers
• Construction companies (residential property builders) with a sales office on-site, where they act or offer additional estate agency services other than the sale of their own construction properties
• A solicitor’s property centre in Scotland
Lettings agents that carry out lettings only do not need to register.
High value dealers
A high value dealer is any business that accepts or makes high value cash payments worth €10,000 or more in exchange for goods, such as jewellers, auctioneers, art dealers and car dealers. This includes when the combined value of goods and services reaches that figure. Firms whose customers deposit cash directly in the bank account or pay cash to a third party also fall within the rules.
High value dealers include jewellers, art dealers, auctioneers and car dealers.
High value dealers must register with HMRC.
Lawyers or legal professions
The following bodies are all supervised by OPBAS.
If you are not registered with any of these, you must register with HMRC.
Money service businesses: bureau de exchanges, bill payment service providers or telecommunication, digital and IT payment service providers
Companies of this kind should be registered with the FCA under the Payment Services Regulations 2009.
But they will also need to register with HMRC for AML.
You need to register with one of the following, both of which are supervised by OPBAS. If you are not registered with either, you must register with HMRC or the FCA:
Trusts and company service providers
HMRC is the supervisory authority for trust or company service providers, unless they’re supervised by their own supervisory body, namely the:
Where can I get more guidance for AML compliance?
To understand the changes brought about by 5MLD, and learn how to comply with the money laundering regulations, you can download our free guide: 5MLD: Your guide for compliance.
You’ll also find useful guidance links on page 9 of the UK government’s explanatory memorandum to the money laundering regulations.
Note that the money laundering regulations are deliberately not prescriptive. They are there to provide the flexibility in order to promote a proportionate and effective risk-based approach to combating money laundering and terrorist financing.
How can we help?
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This blog was updated in February 2020. It was first published in 2018.