The Money Laundering Regulations 1993

Explanatory Note

(This note is not part of the Regulations)

These Regulations give effect to articles 3, 4, 10 and 11 of the Council Directive No. 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering (OJ No. L166, 28.6.91, p. 77). In so far as other new legislative provision was needed to implement the other provisions of the Directive, this provision is contained in the Criminal Justice Act 1993 (c. 36). The Regulations come into force on 1 April 1994.

Various words and expression used in the Regulations are defined in regulations 2, 3 and 4. Where business relationships (regulation 3) are formed, or one-off transactions are carried out, in the course of “relevant financial business” (regulation 4) the persons carrying out that business are required to maintain certain procedures for the purposes of forestalling or preventing money laundering (these include the procedures set out in regulations 7, 9, 12 and 14). They are also required to train their employees in those procedures and, more generally, in the recognition of money laundering transactions and the law relating to money laundering. A person who fails to maintain the procedures and carry out the training is guilty of an offence (regulation 5). Where an offence is committed by a body corporate, partnership or unincorporated association, directors and managers of those bodies and certain other specified persons are guilty of the offence (regulation 6).

Except where an exemption is provided under regulation 10, satisfactory evidence of the identity of an applicant for business must be obtained in the circumstances described in regulation 7. Payment from (broadly speaking) a bank or building society account may be acceptable evidence of a person’s identity where it is reasonable for the payment to be made by post (regulation 8). Where the applicant for business is, or may be, acting on behalf of another person, reasonable measures must be taken to obtain evidence of the identity of that other person (regulation 9). Provision as to when evidence is satisfactory for the purposes of the Regulations and as to how quickly it must be obtained is contained in regulation 11.

Records of all identification evidence that has been obtained and of all transactions with applicants for business that have been carried out must be kept for the period of five years (regulations 12 and 13).

Within each relevant financial business, a person must be identified as the person to whom a report is to be made of any information that gives rise to a knowledge or suspicion that money laundering is taking place. That person must consider the reports and, if he also forms the view that money laundering may be taking place, he is required to make a report to a constable (regulation 14).

Where supervisory authorities (regulation 15) obtain information indicative of money laundering, they are required to make a report to a constable (regulation 16). Inspectors and certain other persons who work with supervisory authorities under various statutory provisions are required to report any such information to the relevant supervisory authority or to a constable.

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