Criminal penalties kept in revised ML Regulations

Two and half years after the initial call for evidence and two consultations and a rigorous interrogation of the red tape impact later, the UK Government has published changes to the Money Laundering Regulations 2007 (MLR).

Timon Molloy, Editor (timon.molloy@informa.com)

Crime risk

There are few surprises as HM Treasury officials have been commendably open throughout the process. Although MLROs were hoping criminal sanctions would be removed, the majority of respondents opposed the idea, believing it would send out the wrong message: the Government agreed. In answer to criticism that criminal penalties promote over-compliance at the expense of the risk-based approach, some respondents pointed to the Financial Services Authority’s (FSA) thematic review of banks’ management of high ML risk situations [1], which found that three quarters of the institutions sampled were failing in their AML duties. There is a measure of comfort though for practitioners in the affirmation by the Crown Prosecution Service (CPS) that it would not be in the public interest to prosecute individuals in the regulated sector for “minor, procedural or accidental regulatory failures”.