Regulation  

Advisers risk 'heavy fine' on new money laundering rules

Advisers risk 'heavy fine' on new money laundering rules

Advisers have been urged to act quickly on anti-money laundering rules introduced last week to avoid a "heavy fine".

On December 20 the government introduced the Fifth Money Laundering Directive into UK law as an amendment to the existing Money Laundering Terrorist Financing and Transfer of Funds Regulations 2017. 

The EU rules impose new standards on all financial services firms, including new wording requiring a business to use electronic verification for their anti-money laundering checks wherever possible.  

This means looking at paper-based documents such as passports and driving licenses may no longer be enough to satisfy the law. 

The new rules come into force on January 10 and failure to comply could result in prosecution and heavy penalties.

Anti-money laundering software company Smart Search has warned advisers will be expected to implement the changes "immediately". 

Martin Cheek, managing director of Smart Search, warned the latest regulation may catch a number of people by surprise, given the proximity of its introduction to Christmas.

Mr Cheek said: "It comes into effect on the January 10, so companies will not have long to prepare.

"It is the need for electronic verification that is likely to take most people by surprise. Any lenders or IFAs 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."

rachel.mortimer@ft.com 

What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.