Changes to UK Anti-Money Laundering Regime

The UK's anti-money laundering regulations suffer from an enormously long name, so I will shorten them to the "MLRs" for the purpose of explaining some changes that take effect on 1 September 2022 (except where noted). Perhaps the highlight is that account information service providers (AISPs) will no longer need to comply with the MLRs. This note is a summary for information purposes only, not advice. It does not include changes to the authorities' obligations or offences. If you need advice on any of the changes, please let me know.

• The meaning of a trust or company service provider covers the formation of all forms of business arrangement or "firm", not just companies and other legal persons, including limited partnerships registered in England and Wales or Northern Ireland. TCSPs must conduct customer due diligence when they are providing certain services (outlined in regulation 12(2)(a), (b) or (d) of the MLRs). 

• Cryptoasset transfers will be covered by a new Part 7A from 1 September 2023. The provisions apply to a cryptoasset exchange provider or a custodian wallet provider (referred to as a "cryptoasset business"), whether acting for the transferor ('originator'), the transferee ('beneficiary') or just as an intermediary. Cryptoasset businesses acting for originators of transfers (as well as intermediaries involved in the transfer) must include certain information about the originator and beneficiary of the transfer. Where the information is missing, the cryptoasset business acting for the beneficiary of a transfer (as well as intermediaries involved in the transfer) must request it and consider not making the cryptoasset available (subject to a risk assessment). Similar rules apply in relation to transfers from/to 'unhosted wallets'  (private or self-custody wallets). Cryptoasset businesses must inform the Financial Conduct Authority (“FCA”) of any "repeated" non-compliance. 

• The definition of art market participant in the MLRs will not apply to artists who sell their own works of art over the EUR 10,000 threshold.

• From 1 April 2023, firms covered by the MLRs will have to report to the registrar of companies any material discrepancies between information they hold on the beneficial ownership of a customer and information on the companies register. The registrar has clear powers to deal with such discrepancies. 

• Any change in control of a registered cryptoasset business must now be pre-approved by the FCA (a particularly slow and painful process!), which of course may object and publish a notice of the objection. The FCA and HMRC can now also publish notices of refusals to register applicants. 

• Supervisory authorities can now request suspicious activity reports (SARs) from their members, to assist in meeting their supervisory functions. 

• At long last, account information service providers (or AISPs) will no longer need to comply with the MLRs.

Again, this note is a summary of some changes for information purposes only, not advice. If you need advice on any of the changes, please let me know.