Bribery, fraud and anti-money laundering | UK Regulatory Outlook for May 2024 – Osborne Clarke

HM Treasury publishes AML/CTF surveillance report

HM Treasury has published its 2022-2023 report on anti-money laundering and counter-terrorism financing (AML/CTF) supervision, detailing the activities of AML and CTF regulators – HMRC, the Financial Conduct Authority (FCA), the Gambling Commission and 22 supervisory authorities dealing with legal and accounting matters. Among the key points that emerged are:

• approximately 10% of all regulated companies were deemed high risk by regulators, as in previous years;
• total fines imposed on all 25 regulators was £197,000,000 compared to £504,000,000 in 2021-22, however the report noted this was mainly due to fewer large penalties imposed by the FCA;
• The FCA imposed the highest penalties on average (£19.4m), followed by the Gambling Commission (£2.8m), compared with the HRMC (£7,000) and professional bodies (£4,000);
• According to the FCA, retail banks, wholesale banks, wealth management companies and cryptocurrency companies are most at risk of financial crime and use for money laundering;
• HMRC has found that money services companies, art market participants and trust and company service providers have the highest risk of money laundering; AND
• Typical weaknesses identified include inadequate risk assessments that do not fully address all risks involved, inadequate staff training leading to poor knowledge or understanding of regulations, and inadequate documentation of policies and procedures.

As previously reported, Treasury is currently consulting on reforms to improve the effectiveness of the Money Laundering Regulations 2017 (MLR). For the general election on 4 July 2024, the MLR consultation may be extended due to restrictions on transparency during the election period. HM Treasury is also due to publish its response to the 2023 consultation on reform of the UK AML/CTF regulatory and supervisory framework (see our Insights for more information). The Government’s second three-year economic crime plan sets out how it intends to continue working to reduce money laundering, sanctions evasion, fraud and the recovery of more criminal assets (see our Statistics for more details).

Labor’s David Lammy said in a keynote speech at the Institute for Public Policy Research (IPPR) on 21 May 2024 that, if elected, Labor plans to introduce a package of measures to tackle corruption and money laundering. This includes working with the private sector to take action against professionals and kleptocrats, creating best practice in anti-money laundering regulation and supervision, and increasing the corporate transparency of trusts through regular reporting requirements.

After the elections, the new parliament will convene on July 9, 2024. On July 17, during the opening ceremony and the king’s speech, the new government’s agenda for the upcoming parliamentary session will be set. In our insight, we will look at the legislation we are dealing with in the run-up to the general election.

JMLSG is consulting on changes to AML/CTF guidelines

The Joint Money Laundering Steering Group (JMLSG) has launched a consultation on its proposed changes to Sector 18 (Wholesale Markets) in Part II of its anti-money laundering and countering the financing of terrorism guidance for the financial services sector.

Proposed changes include:

• customer due diligence: new subsection on authorized personnel acting on behalf of the customer; AND
• new chapter devoted to wholesale financing of subscriptions in private capital funds.

The consultation ends on July 1, 2024. See the press release.