HM Treasury published a consultation on Money Laundering (MLRs)

The UK’s Money Laundering Regulations are under review to enhance effectiveness while minimizing burdens. The consultation aims to streamline regulations, strengthen AML/CTF measures, and ensure proportionality for regulated firms and customers. Stakeholder input is sought on key themes, including customer due diligence, system coordination, regulatory scope, and Trust Registration Service requirements. HM Treasury's consultation aligns with the Economic Crime Plan 2023-26's goal of reducing money laundering.

advtanmoy 15/04/2024 4 minutes read

12 April 2024

Open consultation

Improving the effectiveness of the Money Laundering Regulations

This consultation considers changes to improve the Money Laundering Regulations while minimising burdens on legitimate customers.

The UK’s Money Laundering Regulations (MLRs) form a vital bulwark against the proceeds of crime entering the UK financial system. With new technologies being developed and continuing global threat from economic crime and illicit finance, it is more important than ever that we give businesses the right tools to identify and prevent money laundering and terrorist financing.

A balanced and effective AML/CTF (anti-money laundering and counter-terrorist financing) regime protects the UK’s reputation as a modern, safe place to do business, and protects the integrity of the
financial system. As a global issue, the UK must continue to show leadership on economic crime, driving up standards worldwide and involving the private sector as an active partner.

Ultimately, it is important that our regulation and business environment is attractive to investors and supports economic growth.

Smarter Regulation is fundamentally about ensuring that all areas of UK regulation work as well as they can, where regulation is needed. This includes minimising regulatory burden and future proofing regulations, making regulation a last resort and not a first choice, and ensuring a well-functioning landscape of regulators that are responsive and accountable. This shift allows tailored policies, better aligning with the UK’s financial and economic landscape.

As the 2022 review of the UK’s AML/CTF regulatory and supervisory regime and the Economic Crime Plan 2023-26 set out, there is always room to improve the effectiveness of the regime, especially in context
of an evolving threat.

A key principle in the MLRs is proportionality. Where there is room to find a better balance between what we ask of regulated firms and customers, and the risk of money laundering and terrorist financing, then we want to seek to address this.

This consultation also focuses on areas of the MLRs where additional clarity might support compliance with the regime or where there might be opportunities for stakeholders to work together in a better
way. It is right that we consider a range of ways of resolving these issues and invite the views of those involved or affected by the regime, before making changes. In parallel, we are launching a survey on the cost of compliance with the MLRs which will help inform our assessment of the impact of any changes proposed to the legislation.

Consultation description

HM Treasury has published a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’), which place requirements onto a range of businesses to identify and prevent money laundering and terrorist financing.

HM Treasury committed to consulting on changes to the MLRs as part of a wider programme of work aimed at reducing money laundering, which was set out in the Economic Crime Plan 2023-26.

This consultation principally covers issues with the MLRs already identified by HM Treasury, for example in the 2022 Review of the UK’s anti-money laundering and counter-terrorist financing regulatory and supervisory regime. This review found that, while the core requirements of the regulations were mostly fit for purpose, there were potentially several technical changes that could be made to increase effectiveness and ensure proportionality for both regulated firms and customers.

The consultation also includes issues put forward by key stakeholders, such as the anti-money laundering/counter-terrorist financing supervisors, the regulated industries and their representative bodies, which could reduce burdens and make the regulations more effective at tackling economic crime.

The consultation covers four core themes: