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HM Treasury has published its response to the 2024 consultation on the Money Laundering Regulations, and at first glance, the proposed changes appear to be constructive, and in some cases, quite welcome.
However, digging into the timeline reveals that we're not quite at the implementation stage yet. A further technical consultation is expected, and the necessary regulations will be laid later this year - Parliamentary time permitting.
The key takeaway:
Change is coming - but not imminently. There will be a reasonable lead-in period, giving firms time to prepare and adapt before any new obligations take effect.
In the meantime, here’s a look at what’s potentially on the horizon:
- New guidance on the requirement for source of funds checks as part of ongoing monitoring
- Clarification on identifying agents
- Guidance on the use of digital ID for customer due diligence (CDD)
- Mandatory factors for enhanced due diligence (EDD)
- A proposed change from requiring EDD for complex transactions to “unusually complex” transactions
- Greater flexibility in applying EDD where the counterparty is in a high-risk third country
- Confirmation that simplified due diligence (SDD) may be applied to pooled client accounts
Two changes stand out as particularly practical:
The added flexibility in dealing with high-risk third countries and the shift to identifying transactions as high-risk only when they are unusually complex. Both could help reduce unnecessary compliance burdens once in effect.
For those looking to dive deeper, you can read the full government response here: Read the HMT response
About the author
Colette Best is Kingsley Napley's Director of Anti-Money Laundering. She specialises in the provision of anti-money laundering (AML) and financial crime advice to regulated professionals and entities. Colette undertakes AML audits for law firms, as well as providing AML advice to the firm’s clients. Colette also assists law firms with fraud audits, to help manage their risk arising from the new 'failure to prevent fraud' corporate criminal offence created by the Economic Crime and Corporate Transparency Act 2023
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