There are a number of significant new provisions which ought to make firms sit up and take notice.
John Dobson (pictured) is chief executive at SmartSearch
Anybody who takes the time to read my occasional contributions here is probably sick to death of me banging on about the fifthEU Money Laundering Directive (5MLD), and the benefits of moving to an electronic verification and screening platform to keep ahead of the anti-money-laundering (AML) rules.
With 5MLD finally coming into force in UK law at the start of the year, you might think it’s about time I shut up about it.
Well sorry, folks, but that’s not going to happen.
For one thing, it’s too important to keep quiet about.
As long as money laundering helps to finance the international, drugs trade, human trafficking and terrorism, I’m going to keep shouting about how best to stop the criminals in their tracks.
The good news is, I’m going to have to start talking about something else soon.
Not long after the fifth Directive, EU legislators passed another sixthMoney Laundering Directive (6MLD).
That’s due to come into force across the EU in December 2020.
The Government may have ‘got Brexit done’ but this falls within the transition period where we are still operating EU rules.
Besides, there is little appetite for regulatory divergence on this issue, where the approach of legislators is increasingly a global one, under the auspices of the Financial Action Task Force.
So it seems highly likely that 6MLD will be applied in the UK too.
There are a number of significant new provisions which ought to make firms sit up and take notice.
The new Directive increases the scope of money laundering to include ‘aiding and abetting’, and increases the maximum prison term from one year to four years.
The Directive will also extend criminal liability to ‘legal persons’ – companies, in other words – where they have failed to prevent illegal activity by their staff.
The potential penalties include temporary bans on doing business, forced closure of premises, and compulsory winding-up orders.
There is only one direction of travel in AML regulation and that is towards ever tighter controls and penalties.
Even as they get to grips with 5MLD, it is already time for firms to start redoubling their efforts to stay on the right side of AML compliance.
