3 February 2020
Fifth Money Laundering Directive Update
The Fifth Money Laundering Directive (5MLD) which came into force on 10 January 2020 has introduced a number of key changes to the Money Laundering Regulations 2017 which law firms as well as other bodies will be required to comply with. The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (the 2019 Regulations) which gave effect to most of the provisions of 5MLD were only published by the Government on 20 December 2019. Despite the short timeframe, the 2019 Regulations require regulated bodies to amend various of their internal key processes by the implementation date - i.e. 10 January 2020.
A few of the key changes introduced that are directly relevant to law firms include the following:
Extending the scope of persons subject to the previous 2017 Regulations
- Extending the client due diligence regime and measures required for enhanced due diligence
- Creating a system of registration for crypto-asset businesses
- Introducing duties to collect proof of registration for entities and inform the registry of any discrepancies in their information
In order to assist firms with re-assessing their procedures effectively to comply with the requirements, the Legal Sector Affinity Group (LSAG) has published a summary of changes to the 2019 Regulations which may be found here (https://www.sra.org.uk/globalassets/documents/solicitors/firm-based-authorisation/interim-legal-sector-affinity-group-guidance.pdf?version=48dd5d). The LSAG is currently in the process of drafting updated guidance on the 2019 Regulations which will require Treasury approval before being published in the upcoming months.