10 January 2020: The revised fifth Anti-Money Laundering Directive came into effect on 10th January.
The amendments in the EU’s Fifth Anti-Money Laundering Directive (5MLD) are designed to bolster the UK’s current AML regime and bring it in line with global standards. The Regulations, which were initially published by the Government on 20 December 2020 will have a wide-reaching effect across a broad range of industries. For the financial services sector, the main changes of interest include the following:
New persons fall within the scope of the Regulations: The scope has been expanded so that crypto-asset exchange providers, crypto-asset automated teller machines and wallet providers now fall within the remit of the 2017 Regulations. The changes take into account technological advancements that have altered the financial landscape. The changes will not affect, however, non-custodian wallet providers or open-source software publishers, as had been initially proposed.
Bank account access: The new Regulations impose a duty on financial institutions to give financial intelligence units (FIUs) and national regulators access to UK bank account details in certain circumstances. These include where a law enforcement authority or national crime agency is investigating money laundering, terrorism or other functions.
Due diligence: Crypto-asset exchange providers and custodian wallet providers must now apply customer due diligence measures alongside their other obligations. The Regulations also strengthen the existing due diligence measures.
Crypto-asset regulation: The Regulations introduce the Financial Conduct Authority (FCA) as the body responsible for supervising crypto-asset businesses for the purpose of AML/CTF. Separately, the FCA has published information about the scope of its new remit, its approach and the process firms should take to obtain regulation. It is important to note that FCA registration for this purpose does not amount to authorisation to conduct regulated activities. Firms should ensure that they are not misleading their customers as to their registration and authorisation status.
From 10 January, new crypto-asset businesses will be required to register with the FCA before they can conduct crypto-asset activities. Existing businesses have until 10 January 2021 to register.
While the UK is set to leave the EU on 31 January 2020, it is bound to implement the new directive as it is still a Member State at the time of its coming into force.