Firms in the financial services sector have one week remaining to implement any money laundering changes after the government introduced the Fifth EU Money Laundering Directive (5MLD) into UK law on 20 December.

The amendment, introduced as part of The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 and coming into force on 10 January 2020, includes changes to an existing regulation that several financial services firms will need to adapt to.

The key change indicates that businesses must use electronic verification for their anti-money laundering checks – rather than looking at paper-based documents such as passports or driving licenses.

Lenders, financial advisers and any third parties such accountants, solicitors or estate agents are likely to be affected by the regulation amendment. Other sectors to fall under the new regulations will include crypto-currency exchange platforms, as well as letting agents where rent is above €10,000 per month.

Managing director of the anti-money laundering specialist SmartSearch, Martin Cheek, commented: “The 5MLD regulations coming into law may well catch a number of people by surprise, happening, as it has, so close to Christmas.

“It is the need for electronic verification that is likely to take most people by surprise. Any lenders or financial advisers who do not already have a trusted means of doing this will need to implement this immediately to ensure they are compliant and save themselves from a heavy fine.

“The regulations are designed to help tackle rising levels of fraud and eliminate money laundering – things that are likely to be a key priority for everyone this year.”

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