Implementing the fifth Anti Money Laundering Directive
By David Menzies, Director of Practice
20 December 2019
Legislation to implement the EU’s fifth AML Directive has been published and will become effective on 10 January 2020. David Menzies looks at the changes that firms require to be aware of.
Legislation to amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the 2017 AML Regulations) was laid in Parliament on 20 December 2019. The amending legislation makes the necessary changes to UK legislation to take account of the requirements under the EU’s 5th AML Directive (5AMLD).
Many of the changes under 5AMLD don’t affect accountancy firms – as the changes bring letting agents, art dealers and crypto currencies into scope. Insolvency Practitioners need to be aware of these changes in case of appointment over a newly regulated entity.
There are however a few key areas that accountancy firms will need to address in their policies and procedures:
- when you take on a client, you must check that the client has filed details of the Persons with Significant Control with the registrar (i.e. Companies House) and report any discrepancies you identify;
- electronic ID verification is to be encouraged as a reliable source of evidence, where the electronic process is free from fraud and provides sufficient assurance of the identity of the individual; and
- firms providing both direct and indirect tax advice are now captured by the rules (e.g. repayment agents who act in the course of business as tax advisers, often referred to as High Volume Repayment Agents).
CCAB is working on updating the AML Guidance for the Accountancy Sector and this will be notified on the AML news page when it is published.
Accountancy Europe has published a detailed guide on 5AMLD and how it affects accountants which provides useful guidance.
While firms will be required to be compliant with the new requirements from 10 January 2020, the timing of the publication of the legislation so close to the effective date and with many firms closed for a significant period over Christmas and new year in the interim does present challenges for firms to be fully compliant. As an AML Supervisory Body, ICAS will take into account the short lead-in time which firms have been given to implement all the new requirements in assessing the response to non-compliance identified. Each case will be assessed on its own merits.
ICAS has a strategic partnership with Amiqus ID which provides electronic AML services that aid compliance with the new AML requirements and reduce risks associated with non-compliance.