What are the Anti-Money Laundering Laws and Regulations?

The rules and regulations to Anti-Money Laundering can seem confusing, but this guide from DeltaNet explains everything you need to know! Read now.

Anti-money laundering (AML) is the process of identifying and preventing criminals from concealing proceeds of crime and profiting from them. Money laundering is a criminal activity that both damages the economy and facilitates and funds criminal acts. There are a number of regulations and laws surrounding anti-money laundering efforts, including the Proceeds of Crime Act (2002), the Terrorism Act (2000), and the Anti-Money Laundering Act (2018).

The impact and authority of anti-money laundering laws and regulations are far reaching and call for organisations in the regulated sector to perform due diligence checks, abide by their reporting obligations, and cooperate with officers of the law when requested by the court.

The UK’s AML regime has stepped up recently; 2018 saw the launch of a new watchdog to strengthen defences against money laundering and terrorist financing. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is a group that works with AML supervisors and law enforcements to improve cooperation and improve general standards for AML efforts.

Proceeds of Crime Act 2002 (POCA)

This Act deals with the process of recovering assets that have been gained through crime. Prior to the Act, confiscation and recovery couldn’t occur until after a conviction had taken place, but in 2002 this changed, meaning that assets could be recovered upon suspicion of crime and held until conviction (or release).

Put simply, the primary aim of POCA is to reduce the number of loop-holes in the financial system and to reduce the number of cases where criminals can profit from crime. The aim is to cut the criminals off from their motivations – money and assets, and prevent them from hiding any ill-gotten gains prior to conviction.

The Act was introduced to improve the legislation around money laundering, and the treatment of proceeds of crime, laying out much more concrete and transparent rules for authorities.

The changes that the POCA brought about highlight how effective it has been too. Between 2010 and 2014 more than £746 million of criminal assets were seized, as well as assets worth more than £2.5 billion being frozen.

Terrorism Act 2000

The Terrorism Act (2000) is a piece of permanent anti-terrorism legislation in the UK. It aims to combat the global problems of terrorism, along with its financing – something that is often facilitated through reverse money laundering.

In many cases, terrorist operations are fuelled from legitimate sources of money. By using this once ‘clean’ money for deadly causes, they are tainting it, which is why it’s called reverse money laundering.

Despite its name The Terrorism Act works heavily to prevent the financing of terrorism and, as such, is an important piece of legislation in the anti-money laundering fight. It aims to leave people more vigilant about where money goes to once it is transferred, increasing vigilance and awareness in the regulated sector and empowering staff to raise suspicion if they see cause.

Criminal Finance Act 2017

The Criminal Finance Act (2017) gives law enforcement agencies more powers so that they can recover the proceeds of crime, as well as tackle money laundering, tax evasion, corruption, and the financing of terrorism.

The Act makes companies and partnerships criminally liable if they fail to report suspicion of crime (whether this is due to a member of staff or an external agent). The Act is far reaching and can be upheld even where the business was not involved in the Act or aware of it at all. A prosecution could lead to both a conviction and hard-hitting penalties for any organisation that fails to report suspicion.

Anti-Money Laundering Act 2018

Before this Act was passed, the UK’s domestic sanction regimes were confined to terrorism. The introduction of the Anti-Money Laundering Act in 2018 meant that England and Wales would have the power to impose sanctions independently if necessary, i.e. post-Brexit.

The Anti-Money Laundering Act (2018) complies with the UK’s obligation to conform to standards set by the United Nations regarding anti-money laundering. It pushes towards the investigation and prevention of money laundering and terrorist financing and works to reduce and overcome threats to the integrity of the international financial system.

Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017

This Act introduces the provisions of the European Union’s Fourth Anti-Money Laundering Directive (4 MLD) into national law. These regulations override the Money Laundering Regulations (2007) and the Transfer of Funds (Information on the Payer) Regulations (2007).

These developments increase the emphasis on a risk-based approach to money laundering. A whole series of internal controls and procedures were brought in with the Act, including customer due diligence, record keeping, and imposing a number of obligations on senior management and employers. Organisations must keep up with the changes, ensuring that policies and procedures are in place to deal with the potential risks they could face.

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