‘Gold plated’ money laundering plans threaten new burden on firms’

https://www.lawgazette.co.uk/law/gold-plated-money-laundering-plans-threaten-new-burden-on-firms/5060758.article Gold plated' regulations transposing the EU’s fourth money laundering directive into UK law threaten to impose unnecessary burdens on law firms, the Law Society has told the government. Responding to a consultation by HM Treasury on the proposed Money Laundering Regulations 2017, Chancery Lane says that small firms and sole practitioners 'will struggle more than most to bear the cost of additional red tape' resulting from the regulations. ‘Gold plating’ the directive could place UK firms at a competitive disadvantage compared with other EU firms, and those based elsewhere in the world after the UK leaves the EU. The response, prepared by the Society’s Money Laundering Task Force, identifies numerous examples of what it calls 'unjustified gold plating'. These include:
  • The requirement for some firms to appoint an individual at the level of 'board of directors' to ensure compliance - despite the fact that firms already have a compliance officer for legal practice and a money laundering reporting officer.
  • The extension of certain obligations to 'agents' in addition to employees. This will impose a 'significant additional burden on the regulated sector' with no additional benefit.
  • The obligation to apply due diligence to domestic 'politically exposed persons', including all members of governing bodies of political parties. 'Given that there are over 400 registered parties in the UK, most of which are small… we think the definition in the draft regulations is excessively broad and not risk based,' the Society states.
  • The register of beneficial owners of trusts. Trustees could be required to submit duplicate information. This will be time consuming, onerous and, where trustees are professional trustees, will incur associated, duplicate costs. The proposed obligation to report on events in the same tax year that they occur is 'unworkable'.
The Society also describes as 'unrealistic and unworkable' a proposed requirement to provide due diligence information within two working days. 'There are approximately 4,000 sole practitioners and 4,000 firms with two to 10 partners in England and Wales that will have many competing priorities and statutory deadlines to meet at any given time,'  the response notes. Responding within two working days 'while continuing to meet clientss needs is an unrealistic expectation for sole practitioners and legal professionals working in small firms'. The consultation closed on 12 April. HM Treasury says it is 'analysing feedback'.
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