UK unveils sweeping changes to AML regime

Corporate corruption and terrorist finance targeted in wide-ranging Home Office action plan

In what have been described as the most significant changes to the UK’s anti-money-laundering (AML) regime in more than a decade, new powers have been proposed for regulators and enforcers working to tackle the movement of illegal funds.

Unveiled on 21 April, the government’s Action Plan for anti-money laundering and counter-terrorist finance sets out a range of measures to improve the effectiveness of official responses to suspicious activity.

Key measures proposed by the Home Office under the plan have major implications for corporations in both the non-financial and financial sectors.

In particular, watchdogs would be granted new administrative powers to designate a corporate entity “of money-laundering concern”, and require that entity’s business partners in regulated sectors to take “special measures” when dealing with it.

The plan also calls for a fundamental reform of the UK’s suspicious-activities reporting regime, which currently requires regulated, corporate players to flag up any suspected money-laundering patterns to the National Crime Agency (NCA).

Under the revised regime, private- and public-sector resources for addressing suspect transactions would be improved to include enhanced information sharing between companies and officials.

Meanwhile, the NCA will receive a clutch of new powers, such as the ability to issue Unexplained Wealth Orders (UWOs) to individuals suspected of money laundering, requiring them to fully disclose their financial arrangements.

That will be supported by a forfeiture power that the NCA can exercise if an order’s recipient proves unresponsive, or if the Agency concludes that the answers provided are unsatisfactory.

A further measure – an illicit-enrichment offence, targeted at public-sector executives who have sudden and inexplicable increases in their financial assets – chimes with the US Foreign Corrupt Practices Act, which penalises corporate bribery of overseas officials, although the new AML measure has a UK focus.

The plan’s primary objective is to highlight and root out finance networks that are responsible for funding terrorism – but the secondary aim is to ensure that corporate corruption in a more general sense has no place to hide.

Home secretary Theresa May said: “Britain’s world-leading financial system is at risk of being undermined by money laundering, illicit finance and the funding of terrorism.

“The laundering of proceeds of crime through UK institutions is not only a financial crime, it fuels political instability around the world, supports terrorists and extremism, and poses a direct and immediate threat to our domestic security and our overseas interests.”

She added: “This action plan sends a clear message that we will not tolerate this type of activity. We will forge a new partnership with industry to improve suspicious activity reporting, deliver deeper information sharing and take joint action on enforcement.

“And we will act vigorously against the criminals and terrorists responsible, to protect the security and prosperity of our citizens, and safeguard the integrity of Britain’s financial economy.”

The plans are now subject to a public consultation, which closes on 2 June.

Find full details of the consultation here.

Click here for the full action plan.

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