LONDON – The Financial Services Authority (FSA) has published information revealing new and increased supervisory responsibilities for tackling financial crime. The Money Laundering Regulations 2007 (MLR) brought before Parliament this summer will bring the UK into alignment with the European Union’s Third Money Laundering Directive (3MLD) before the implementation deadline of December 15, 2007.
The FSA will assume responsibility for Annex I financial institutions, which includes supervision of businesses’ carrying activities for anti-money laundering and counter-terrorist financing purposes. These previously unregulated activities include lending, financial leasing, safe custody services, issuing and administering means of payment, offering guarantees and commitments, participation in securities issues and providing related services, and advice to undertakings on capital structure, industrial strategy and related questions and advice, as well as services relating to mergers and the purchase of undertakings.
A risk-based approach will be adopted in supervision, with supervisory resources concentrated where risk is greatest. Questionnaires, ad hoc information requests, mystery shopping, help lines and thematic works will be used in considering the anti-money laundering controls of registered businesses.
For enforcement, a risk-based evaluation of the nature and seriousness of any suspected breach of the MLR will be considered before the FSA responds. Information requirements, interviews and search warrants are some of wide range of investigative tools available for enforcement.
The FSA has published a document outlining its approach to registering and supervising the businesses that will, for the first time, be monitored under MLR. Businesses that are not yet registered and perform activities such as money broking, portfolio management and advice, and safekeeping and administration of securities as well as those activities listed above could be required to register with the FSA. However, a business will not need to register with the FSA if it only performs such an activity on an occasional or very limited basis. The paper considers what it means to be a registered business under the MLR, who needs to register and how to go about registering with the FSA. The FSA has the authority to levy penalties on (and in certain cases prosecute) registered businesses.