The Impact of the new Money Laundering Regulations
What are the changes?
From 1 March 2004, the Money Laundering Regulations 2003 come into effect in conjunction with the Proceeds of Crime Act 2002. These new regulations place on a range of professional advisors the obligation to ensure that they understand their client’s business and particularly that they are satisfied as to the source of funds used in transactions.
What is the background?
We live in a society which constantly needs to balance the rights of the individual, with the need to ensure that the law is enforced, particularly in respect of organized, large scale criminal activities. We see this in the increasing safeguards with banks and credit cards and now with the possibility of identity cards. There have been rules regarding money laundering for a number of years, but these new regulations significantly increase the burden on all professional advisors
For any client we must satisfy ourselves that we know who they are and that they are operating a bone fide business. For most existing clients, this may not involve any action, but for new clients it may mean the need to ask to see passports and proof of address. Although this would appear tedious red tape, we trust that our clients will understand the reasons for these new regulations.
What is the Impact on Ourselves?
We need to be able to demonstrate that we have sufficiently robust ‘Know Your Client’ systems in place to show an active approach to these regulations, should we ever need to defend our own actions. If we have any suspicions at all, we are under an obligation to report them to the National Criminal Intelligence Service, without notifying our client of our actions.
