5MLD money laundering rules come into force

New anti-money laundering (AML) rules came into force today after the Government had introduced the Fifth EU Money Laundering Directive (5MLD) into UK law on 20 December 2019.

The new rules have placed increased importance on the acceptable use of electronic verification methods in confirming identity without the need for passports or utility bills.

The 5MLD was transposed into UK law by regulations published just days before Christmas, which left firms with little time to make any necessary changes.

Financial services firms, solicitors, accountants, estate agents, as well as letting agents not currently using electronic verification, have been urged by the Government to reassess their customer due diligence processes.

Firms required to take action also include those from sectors that were not previously included, such as crypto-currency platforms, art dealers, pre-paid cards and certain letting agents dealing with rents of over €10,000 per month.

Commenting on the new regulations, managing director of the AML specialist SmartSearch, Martin Cheek, suggested the Government, as well as the EU, were right to seek more electronic verification, and that it had been shown to be ‘more reliable, quicker and cost effective’ than manual checks.

“Firms can have highly efficient screening and ongoing monitoring for politically exposed persons and sanctions, all of which are a requirement of the AML rules,” Cheek said.

“It’s a pity the regulations didn’t appear until so late in the day, but it is imperative that firms take action now to show they comply with the new regulations or else they could face a significant fine.

“There is increased national and international focus on the scourge of money laundering and terrorist financing, and electronic verification is an easy way to help prevent this.”

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