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HM Treasury and the UK Money Laundering Regulations UK MTA Conference 25 th February 2010 . Keith Davis, HM Treasury. Agenda. UK anti-money laundering regime Counter Terrorism Act Financial Restrictions (Sanctions) Review of the ML Regulations.

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Hm treasury and the uk money laundering regulations uk mta conference 25 th february 2010 l.jpg

HM Treasury and the UK Money Laundering RegulationsUK MTA Conference25th February 2010

Keith Davis, HM Treasury


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Agenda

  • UK anti-money laundering regime

  • Counter Terrorism Act

  • Financial Restrictions (Sanctions)

  • Review of the ML Regulations


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Guiding Principles in the challenge against ML, TF and PF

  • Effectiveness

  • Proportionality

  • Engagement


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What is money laundering?

  • A significant issue: 3-5% of global GDP (IMF estimate)

  • Potential reputational threat and a serious crime

  • Conversion of the proceeds of illicit activity into apparently “clean” assets in order to -

    • disguise illegal source of criminal proceeds;

    • enable the criminal to enjoy their profits without jeopardising their source;

  • Proceeds are derived from “predicate” offences (UK = all crimes)

  • Can involve all types of property, not just cash or equivalents


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International response & UK AML systems

  • International standards: e.g. FATF 40+9 Recc’s

  • European Union action: 3MLD

  • Domestic legislative measures & systems: to regulate businesses AND collect, analyse, share and use information

  • Buttressed (e.g. in UK) by practical guidance


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Evolving AML landscape

  • Huge progress following ‘standing start’ from late 1980’s / early 1990’s

  • Context of continuing international evolution & development and domestic change


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Counter Terrorism Act 2008

  • CT Act 2008 granted HM Treasury new powers to issue Directions to the financial sector to take certain measures against target entities

  • Powers invoked in October 2009 against two Iranian firms - Bank Mellat and the Islamic Republic of Iran Shipping Lines (IRISL)

  • UK considers CT Act to be a highly valuable tool


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Financial Restrictions (Sanctions)

  • A separate regime, run by colleagues in the HMT Asset Freezing Unit

  • Range of specific RESTRICTIONS on individuals, organisations & jurisdictions. SEE HMT WEBSITE

  • Al-Qaida & Taliban, Belarus. Burma/Myanmar, Democratic Republic of Congo, Eritrea, Federal Republic of Yugoslavia & Serbia, International Criminal Tribunal for The Former Yugoslavia, Iran, Iraq, Ivory Coast, Lebanon and Syria, Liberia, North Korea (Democratic People’s Republic of Korea), Republic of Guinea, Somalia, Sudan, Terrorism and terrorist financing, Zimbabwe


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REVIEW OF ML REGULATIONS 2007 : Call for Evidence last year

  • Taking stock of UK AML regime

  • Advertised to >6000 contacts and through industry associations, professional bodies and others to their members

  • Over 250 individual from 175 organisations

  • 30 events held – London, Edinburgh, Manchester, Birmingham, Belfast

  • 90 written responses


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Call for Evidence covered these issues

  • Effectiveness & proportionality

  • Regulations

  • Guidance

  • Supervision

  • Industry practice

  • Customer Experience


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Emerging themes

  • The risk based approach

  • Customer due diligence, criminal sanctions, beneficial ownership, PEPs

  • Supervision & enforcement

  • Compatibility with other elements of UK AML Regime

  • Communication /engagement


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Outputs – evidence based policy

  • Good practice identified

  • Limited regulatory change

  • Improved guidance

  • Influence international standards (FATF, Europe)


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Next Steps

  • Publish summary and responses – Feb 2010

  • Government consultation – Spring

  • Legislative change

  • Ongoing engagement throughout

  • QUESTIONS?


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