EU-level reforms to anti-money laundering laws that took legal effect on January 10 have introduced new requirements for banks handling transactions linked to high-risk countries.
Among the changes to customer due diligence (CDD) are explicit requirements for regulated persons to take reasonable measures to understand the ownership and control structure of their customers, and to verify the identity of senior managing officials when the beneficial owner of a corporate body cannot be identified.
Attempting to stop the movement of illicit funds across international borders is one of the new text's priorities, and banks - considered "obliged entities" and so covered by the 5AMLD - will face more stringent demands when executing transactions linked to countries deemed to pose a high risk of financial crime.
It has been estimated that at least £100bn is laundered through the UK financial system every year. HMRC has warned that all firms are required to be fully compliant with the new requirements from 10 January (last Friday), although the short lead-in time will be taken into account when assessing any sanctions.
In particular, says HMRC, trust or company service providers and money service businesses who apply to register from 10 January will not be able to carry out relevant activity until HMRC has determined their application.
Lawyers will now have to check beneficial ownership registers of legal entities in scope of the People with Significant Control (PSC) requirements before establishing a business relationship.
Where there is a discrepancy between the beneficial ownership information on the registers and the information given to them in the course of carrying out CDD, these will have to be reported to Companies House.
The regulations also extend the definition of 'tax advisor'. Anyone who provides support with tax matters, either directly or indirectly, or even just a repayment agent, will now come under the definition of an accountancy service provider subject to anti-money laundering (AML) reporting rules.
Furthermore, the AML regulations now apply to art dealers and letting agents who deal with or are intermediaries to transactions worth €10,000 or more.
The 5th Anti-Money Laundering Directive (5AMLD ) was adopted by the EU as part of the Juncker Commission's response to the terrorist attacks in Paris in 2015 and Brussels in 2016 and the Panama Papers scandal.