WIREDGOV

Government toughens money laundering regulations

HM TREASURY News Release (84/07) issued by The Government News Network on 25 July 2007

Today the Economic Secretary, Kitty Ussher, published new tough and targeted Regulations to fight Money Laundering and Terrorist Financing. The Money Laundering Regulations, which will come into effect on the 15th December, are designed to ensure the UK response to money laundering at home and abroad is effective and proportionate.

The Economic Secretary said:

'These Regulations will strengthen further the UK's defences against money laundering and terrorist finance. In line with the Government's financial crime strategy these Regulations introduce tough and targeted new measures where the risks are greatest and at the same time ensure that businesses and consumers in low risk situations face fewer burdens than previously.'

These Regulations are the result of extensive consultation with both the private sector and law enforcement, including two written consultation documents, and carefully balance the views different parties.

They take tough action where the risks require it, by:

* extending supervision to all businesses in the regulated sector to secure greater compliance with anti-money laundering controls including, for the first time, estate agents, trust and company service providers and consumer credit businesses;
* including strict tests to ensure money services business and firms that help set up and manage trusts and companies are not run for criminal purposes;
* requiring extra checks on customers that pose a higher risk of money laundering (for example foreign heads of state and non face to face customers);

In addition, the measures announced today will also reduce regulatory burdens in low risk areas. For example:

* firms will be able to make fewer checks in low risk situations, such as occupational pension funds and child trust fund administration;
* the number of identity checks will be reduced with firms being able to rely upon checks done by certain other firms (for example solicitors and FSA authorised financial advisors); and
* greater flexibility will be introduced to record keeping rules so that firms can keep only the important details rather than whole documents.

NOTES TO EDITORS

1. The Money Laundering Regulations, published today, build on responses to the Government's consultation on the draft Regulations, published in January 2006. They can be found at http://www.hm-treasury.gov.uk/documents/financial_services/money/fin_crime_policy.cfm

2. Today's proposals are effective across the 'regulated sector'. 'Regulated' firms include the financial sector, professionals such as lawyers and accountants, casinos, trust and company service providers and estate agents.

3. The Government's Financial Crime Strategy estimated that organised crime costs the UK £20 billion in social and economic harm each year.

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