UK
Answer ... Over the last 24 months, the Financial Conduct Authority (FCA) has taken a tough stance against institutions that have demonstrated poor compliance with their AML obligations. It has issued significant fines against institutions that have breached the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and this trend is likely to continue over the coming months.
The Economic Crime (Transparency and Enforcement) Act 2022, which served as part of the UK government’s response to Russia’s invasion of Ukraine, created a new public register of beneficial owners for non-UK entities that buy or own land in the United Kingdom. This public register, which is for beneficial owners that own more than 25% of shares or voting rights in an entity, is designed to prevent bad actors from using corporate structures to launder money through the United Kingdom.
The Economic Crime and Corporate Transparency Bill, which is currently at the reporting stage in the UK Parliament, will strengthen the United Kingdom’s AML powers. The bill will make it easier for businesses to share information for the purposes of detecting, preventing and investigating economic crime. This will be achieved in part by ensuring that they will not be held liable under civil laws for breaching confidentiality where they share the information in order to help combat economic crime.
The bill will also increase corporate transparency by requiring directors, persons with significant control and those delivering documents to Companies House to verify their identity with the registrar. This new requirement is designed to undermine the ability of bad actors to register fictitious beneficial owners or directors.
The bill will also give Companies House the power to:
- query information that is held on its register;
- reject new filings; and
- compel people to provide additional information to assist Companies House in making a determination about a filing that it has queried.
The bill will further require companies to record the full names of their shareholders in their registers and contains the power to create regulations that will allow more information to be obtained about shareholders.
The bill will also enhance the ability of the UK Financial Intelligence Unit (UKFIU) to secure information from businesses about money laundering by enabling information orders to be made without the need to submit a suspicious activity report.
Lastly, it is likely we will see a growing number of investigations into frauds (and the money laundering associated with them) that were committed during the COVID-19 pandemic in the coming months.
UK
Answer ... The UK AML regime has been evaluated by the Financial Action Task Force (FATF) on four occasions, with the most recent evaluation published in June 2022. The International Monetary Fund carried out a financial sector assessment of the UK AML regime in March 2022.
UK
Answer ... The United Kingdom is currently rated as compliant with 24 recommendations of the FATF and largely compliant with a further 15 recommendations. The one shortfall relates to Recommendation 29, which concerns the independence and operational capacity of the UKFIU. In its previous Market Evaluation Report, the FATF had rated the United Kingdom as being partially compliant with Recommendation 29 due to concerns about the impact of a lack of resources on the UKFIU’s ability to perform its key functions and its operational independence. The FATF has recognised that the United Kingdom has made some progress in enhancing is operational capabilities by hiring additional staff and making more use of technology. However, it has taken the view that the United Kingdom still has more progress to make, which is why the partially compliant rating remains.
UK
Answer ... There have been no noteworthy developments in relation to regtech and suptech over the past 12 months. The FCA held a regtech webinar in February 2022, at which the topic of suptech was also discussed. Over the last 12 months, the FCA has issued a number of significant fines against regulated entities that have breached AML rules or failed to detect market abuse. The increased enforcement activity of the FCA in this area may mean that regulated entities feel that they need to invest in regtech and suptech to help prevent the breaches that the FCA has been taking a tough stance against.
Most of the litigation around virtual assets has been civil in nature and has concerned the freezing and recovery of cryptoassets and/or non-fungible tokens. While there have been reports about the seizure of cryptocurrencies by police forces and enforcement agencies, there have been no significant criminal investigations involving blockchain or digital assets.