With the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 now in force, HMRC has warned that all firms are required to be fully compliant with the new requirements from 10 January (last Friday), although the short lead-in time will be taken into account when assessing any sanctions.
In particular, says HMRC, trust or company service providers and money service businesses who apply to register from 10 January will not be able to carry out relevant activity until HMRC has determined their application.
The regulations also extend the definition of ‘tax advisor’. Anyone who provides support with tax matters, either directly or indirectly, or even just a repayment agent, will now come under the definition of an accountancy service provider subject to anti-money laundering (AML) reporting rules. Under regulation 19 and 26, all such businesses need to carry out an AML risk assessment of new products, business practices or technologies before they implement them; and ensure that people convicted of relevant offences do not act in key roles in their business.
Regulations 27 and 28 require relevant persons to apply customer due-diligence measures where a legal duty applies, and to determine the ownership and control structure of client persons, trusts and companies. All entities that carry out customer due-diligence must tell Companies House if there is a discrepancy between the information that they hold about a beneficial owner and the information on Companies House’s register of ‘people with significant control’. Firms will have to monitor transactions that are either complex or unusually large, whereas the previous criterion was transactions that were both complex and unusually large.
Furthermore, the AML regulations now apply to art dealers and letting agents who deal with or are intermediaries to transactions worth EUR10,000 or more.
‘The regulations do not give guidance on whether an “intermediary” includes dealers and others involved in a transaction who provide advice to owners and collectors, but who do not actually send or receive any of the sale proceeds’, said Kenneth Mullen, Partner at law firm Withersworldwide. ‘However…any professional taking a substantive role in the planning or execution of a sale should assume that the regulations apply to them.’ These businesses are not required to register until 10 January 2021.
According to the Solicitors Regulation Authority (SRA), some 7,000 regulated law firms will be subject to the new AML regulations. They ‘will need to re-assess their processes – making any necessary changes immediately’, says the SRA, citing the new duty to collect proof of registration for entities such as trusts and companies.
However, both HMRC and the SRA say that each case of non-compliance will be assessed on its own merits, taking into account the limited time firms have had to adjust to the changes.