New Anti-Money laundering rules have been put in place, are you adhering to them? Do you even know about them?
The property and art industries are in for a significant change in the next few months. On January 10th, 2020, expanded regulations on money laundering and terrorist financing went into effect.
The anti-money laundering regulations have been set in place in an effort to curb the money laundering and the financing of terrorism. Known as AML 5, the upgraded regulations lay out new compliance standards surrounding:
- Increasing transparency and public accessibility of beneficial ownership of a company
- The extension of the scope of firms subject to the new rules
- Improving cooperation between financial supervisory authorities
- Tighter controls over transactions with customers in third world countries
- Restricting anonymous currency and prepaid card usage
- Improving the identification of PEPs (politically exposed persons)
Anti-Money Laundering Impact on Businesses
With the update to the existing anti-money laundering guidelines, more businesses will fall under the scope of the regulations and be expected to comply with them.
The new businesses that are now subject to the new rules are:
The reason for the increased focus on these businesses is the ease in which high value art and property can be used in money laundering and the covering up of criminal activity.
Here are the ways the anti-money laundering guidelines might impact businesses:
- Money service or trust and company service businesses will be unable to resume relevant activities until they have completed registration with the HMRC
- The agents of money service businesses must receive training from their principals
- The online system allowing agents renting out residential or commercial properties with a valuation of 10,000 euros or more in a calendar month to register won’t open until May 2020. The letting agents that fall into this category will be under the scope of these regulations for the first time
- The definition of a tax adviser has been expanded to include anyone that provides assistance with taxes
- Businesses will be under increased pressure to implement measures to understand the ownership and/or senior leadership of companies
- Tobacco, oil, arms, and precious metals now fall under risky products
- Electronic verification for customers can be used in certain circumstances instead of the traditional methods like passports
- Letting agents must ensure that due diligence is carried out, comprehensive written policies are put in place and staff have received AML training
- Agents must confirm the identity of clients including possible status as a PEP and a confirmation of property ownership
- Those in the art market who deal in sales and purchases of pieces worth 10,000 euros and up will also be required to register
Going forward, businesses will be required to carry out anti-money laundering measures and risk assessments of new technologies, business practices or products.
However, the short lead time for registration is being taken into consideration as business work to comply with the changes.
If you own the kind of business (based on business activities and monetary thresholds) that is subject to the expanded AML-CFT obligations, you should review the guidelines as failure to do so can result in penalties and prosecution.