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New Money Laundering Regulations 2017 & Consultation on the treatment of PEPs

21st March 2017

Money Laundering Regulations 2017 & PEPs

The FCA is now consulting upon new guidance in relation to Politically Exposed Persons (PEPs) now that HM Treasury have published a draft of the new Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

This is also ahead of the Fourth Money Laundering Directive (4MLD) due to be implemented across the EU in June this year.

HM Treasury Published Draft for new Money Laundering Regulations 2017

HM Treasury have now published a consultation on draft regulations to transpose the Fourth Money Laundering Directive and Fund Transfer Regulation into UK legislation.

The draft regulations for the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 were published on the 15th March 2017.

Views on the draft Money Laundering Regulations 2017 have been invited by HM Treasury, with a consultation closing date of 12 April 2017.

FCA Guidance Consultation GC17/2

As a knock-on from HM Treasury’s recent release, the FCA have issued their own Guidance Consultation (GC17/2) that specifically relates to the treatment of politically exposed persons, or PEPs, under the newly drafted Money Laundering Regulations 2017.

Included within the consultation is new guidance for how financial services firms should treat customers who are PEPs when carrying out their anti-money laundering (AML) obligations.

In addition the proposed new guidance clarifies the steps that firms should take when dealing with higher or lower risk PEPs as well as who should be considered:

• a PEP;
• a family member of a PEP; or
• a known close associate

The regulator informs that whilst they “expect firms to take a proportionate approach to meeting their money laundering obligations, there has been some evidence that firms have applied enhanced due diligence measures that were not commensurate with the risk posed by the PEP”

This guidance should give firms the certainty on the FCA’s expectations for how they should treat varying risks posed by politically exposed persons whether the PEP is based in the UK, another EU member state or elsewhere outside of the EU.

The closing date for comments on the Guidance Consultation is just under one week later than that of HM Treasury being on 18th April 2017.

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