UK Treasury issues AML rules

Anti-money laundering

The UK’s new anti-money laundering framework, which implements the EU’s Second money laundering directive, was long past its original deadline. The biggest change the new legislation brings is its application of the AML reporting framework to a host of new industries, including the legal profession, casinos, dealers of high-value goods, insurers, asset managers, accountants, estate agents, auctioneers, and other professions.

But the new rules, which must be implemented by firms by the beginning of March, also bring other changes, many of which remain controversial among bankers.

For example, one banker notes that the statutes make it possible for a money laundering information officer at a financial institution to be prosecuted under criminal law if a bank’s AML system lets a transaction slip through the cracks. "How can we be expected to recruit people for these positions if they are going to be individually prosecuted," says the source. "This is poorly drafted legislation." Indeed, owners or executives of all firms covered by the legislation would be liable for criminal prosecution if they acquire, use, or have possession of criminal property -- essentially putting the burden of proof on firms to show that payments they have received or assets they are managing, for example, are not the result of criminal activity.

The new rules also require banks to take proof and make copies of the identification of all new customers, and have a robust AML system in place. The text of the legislation mirrors recent discussion papers and other work by the Financial Services Authority in this area.