What you need to know
Money laundering is the process of transforming the profits of crime and corruption into ‘legitimate’ assets. It involves the concealment, re-arrangement, and use of proceeds raised from criminal activity. Offences relating to money laundering are set out in Part 7 of the Proceeds of Crime Act 2002.
The Money Laundering Regulations 2007 came into effect on 15 December 2007. The Financial Conduct Authority enforces and supervises the compliance with the Regulations. The Money Laundering Regulations requires certain types of businesses which include those with a strong financial element, such as financial and credit businesses, accountants and estate agents to put in place robust policies and procedures to prevent and detect money laundering activity. There is detailed guidance within the 2007 Regulations on what this involves, including amongst other things:
- analysing the risk of your business being implicated in money laundering
- validating the details of your customers to confirm their identity;
- more comprehensive customer verification in specified circumstances; and
- checking the details of ‘beneficial owners’ of corporate entities
Those required to comply with the Money Laundering Regulations are also set to increase, when the EU’s Fourth Money Laundering Directive is transposed into UK law.