Our team of friendly experts are here to answer your questions
As this Directive is now more than 10 years old, on the 25th June 2015 the EU finalised its 4th Money Laundering Directive to strengthen the EU's fight against money launderers and terrorist financiers. EU member states have until 26th June 2017 to implement the requirements of the new Directive into their national laws.
However, on the 23rd June 2016 the UK electorate took a decision that is sure to alter the UK regulatory landscape - Brexit.
How Brexit will affect the UK's money laundering laws is still uncertain but here are a few possible scenarios.
Business As Usual
Even though the UK has voted for Brexit, the 2 year negotiating process of leaving the EU will not officially begin until the Government triggers Article 50. Even assuming this happens this year, then it will be 2018 at the earliest that the UK ceases to be an EU member state. Therefore, as the deadline for implementing the provisions of the 4th EU Money Laundering Directive is June 2017 the UK will, in the absence of any EU concessions or agreements, still have to enact legislation to bring the requirements of the 4th EU Money Laundering Directive into effect.
Going forward the UK may, in order to maintain a level playing field with the EU, choose to base its future AML legislation on subsequent EU Money Laundering Directives although the UK will no longer be able to influence the content of these.
From EU to FATF
Once we leave the EU, the future of UK AML legislation will be shaped by the Government of the day. However, just because we will no longer be automatically governed by EU Money Laundering Directives doesn't mean the compliance burden will markedly reduce. The UK remains one of the 37 Members of the Financial Action Task Force (FATF) and must therefore ensure it remains compliant with FATF's 40 Recommendations, last revised in 2012. The UK is subject to Mutual Evaluations by FATF, with the next one scheduled for 2018, and will therefore want to ensure it maintains sufficiently robust AML legislation to avoid being classed by FATF as a High Risk or Non-Cooperative jurisdiction.
Setting the standard
As the recently introduced Persons with Significant Control (PSC) Register demonstrates, the UK Government is committed to setting a high standard with regard to transparency. Not only did they decide to introduce a beneficial owner register sooner than most other EU member states, they went beyond the requirements of the 4th EU Money Laundering Directive by making the UK's PSC Register open to public inspection. The UK Government may therefore seek to set the gold standard for future AML legislation by going above and beyond FATF's Recommendations. This could mean the UK adopts a more onerous AML regime which, although helping to protect the UK from flows of illicit money, could leave us at a disadvantage against other EU financial centres.
Whatever the long term consequences of Brexit, the UK will remain a key financial centre where financial institutions and other professional bodies take AML compliance seriously meaning investors and entrepreneurs can feel confident that the UK will continue to be an attractive place to invest and do business.