Member Article

Money Laundering Regulations 2007

With Watson Burton LLP Law Firm

The Money Laundering Regulations 2007 (the “Regulations”) come into force on 15 December 2007 and will completely replace the Money Laundering Regulations 2003. Business owners need to consider carefully whether they are covered by the new Regulations and, if so, how their obligations have changed under the new rules.

What types of business are covered by the new Regulations?

The definitions of the types of businesses covered by the new Regulations have been made simpler. In short, the rules apply to banks, building societies, savings and investment businesses, creditors, auditors, insolvency practitioners, external accountants, legal practitioners, trust or company service providers, estate agents, casinos and high value dealers (when dealing with goods worth over €15,000).

What are the differences between the new and the old rules?

The concept of client identification, known as customer due diligence (“CDD”), has been amended to oblige businesses to maintain ongoing monitoring procedures for as long as you deal with a particular client. Further, CDD now requires businesses to identify any “beneficial owner” of a client, such as a company, trust etc. The “beneficial owner” obligation has been a subject of much debate and, essentially, it is up to businesses to decide what techniques and enquiries to use in this regard.

The new Regulations also introduce a risk assessed approach to CDD. This means that, in higher risk situations, businesses are required to take enhanced CDD measures. It is very important that business owners ensure that their CDD arrangements comply with the new higher standards. However, the Regulations also provide for specific circumstances where simplified CDD measures can be used, for example identifying clients that are themselves credit or financial institutions subject to the regulations and also where the client is a listed company.

Are there any other obligations?

As with the old rules, the new Regulations state that businesses have an ongoing duty to retain CDD records. Businesses are also required to provide regular training to relevant employees on the law relating to money laundering and terrorist financing and also how to recognise and deal with transactions that may be related to these.

What happens if businesses fail to comply with the rules?

The enforcement measures within the Regulations are robust. They include rights of entry and inspection with and without a warrant. Businesses that are covered by the new Regulations and fail to comply are liable to civil and / or criminal penalties.

If you have any queries relating to this article, please contact David Hankin at Watson Burton LLP on 0191 244 4444 or email david.hankin@watsonburton.com.

This was posted in Bdaily's Members' News section by Ruth Mitchell .