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U.K.

Statutory Instruments

2017 No. 692

Financial Services

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

Made

at 9.20 a.m. on 22nd June 2017

Laid before Parliament

at 4.30 p.m. on 22nd June 2017

Coming into force

26th June 2017

The Treasury are designated F1 for the purposes of section 2(2) of the European Communities Act 1972 F2 in relation to the prevention of money laundering and terrorist financing.

The Treasury in exercise of the powers conferred by section 2(2) of that Act and by sections 168(4)(b), 402(1)(b), 417(1) and 428(3) of the Financial Services and Markets Act 2000 F3, make the following Regulations.

F21972 c. 68. Section 2(2) was amended by section 27 of the Legislative and Regulatory Reform Act 2006 (c. 51) and by section 3 of, and the Schedule to, the European Union (Amendment) Act 2008 (c. 7). By virtue of the amendment of section 1(2) by section 1 of the European Economic Area Act 1993 (c. 51), an order may be made under section 2(2) of the European Communities Act 1972 to implement obligations of the United Kingdom created or arising by or under the Agreement on the European Economic Area signed at Oporto on 2nd May 1992 (Cm 2073) and the Protocol adjusting the Agreement signed in Brussels on 17th March 1993 (Cm 2183).

F32000 c.8; section 168(4)(b) was amended by the Financial Services Act 2012 (c.21), Schedule 12, Part 1; section 402(1) was amended by the Financial Services Act 2012 (c.21), Schedule 9, Parts 1 and 7; and section 417(1) was amended by section 48(1)(d) of the Financial Services Act 2012 (c.21). There are other amendments to section 417(1) which are not relevant to these Regulations.

PART 1 U.K.Introduction

Citation and commencementU.K.

1.—(1) These Regulations may be cited as the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

(2) These Regulations come into force on 26th June 2017.

Prescribed regulationsU.K.

2.  These Regulations are prescribed for the purposes of sections 168(4)(b) (appointment of persons to carry out investigations in particular cases) and 402(1)(b) (power of the FCA to institute proceedings for certain other offences) of the Financial Services and Markets Act 2000 F4.

F42000 c.8. Section 168(4)(b) was amended by Part 1 of Schedule 12 to the Financial Services Act 2012 (c.21); and section 402(1) was amended by Parts 1 and 7 of Schedule 9 to the Financial Services Act 2012.

General interpretationU.K.

3.—(1) In these Regulations—

Annex 1 financial institution” has the meaning given by regulation 55(2);

appropriate body” means any body which regulates or is representative of any trade, profession, business or employment carried on by a relevant person;

[F5art market participant” has the meaning given by regulation 14(1)(d);]

auction platform” has the meaning given by regulation 14(1)(c);

“auditor” (except in regulation 31(4)) has the meaning given by regulation 11(a);

authorised person” means a person who is authorised for the purposes of FSMA;

the FCA” means the Financial Conduct Authority;

“beneficial owner”—

(a)

in the case of a body corporate or partnership, has the meaning given by regulation 5;

(b)

in the case of a trust or similar arrangement, or the estate of a deceased person in the course of administration, has the meaning given by regulation 6;

(c)

in any other case, has the meaning given by regulation 6(9);

“body corporate”—

(a)

includes—

(i)

a body corporate incorporated under the laws of the United Kingdom or any part of the United Kingdom, and

(ii)

a body corporate constituted under the law of a country or territory outside the United Kingdom;

(b)

but does not include—

(i)

a corporation sole, or

(ii)

a partnership that, whether or not a legal person, is not regarded as a body corporate under the law by which it is governed;

bill payment service provider” means an undertaking which provides a payment service enabling the payment of utility and other household bills;

“branch”, except where the context otherwise requires, means a place of business that forms a legally dependent part of the entity in question and conducts directly all or some of the operations inherent in its business;

business relationship” has the meaning given by regulation 4;

the capital requirements directive” means Directive 2013/36/EU of the European Parliament and of the Council of 26th June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC F6;

[F7the capital requirements regulation” means Regulation (EU) No. 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms;]

cash” means notes, coins or travellers' cheques, in any currency;

casino” has the meaning given by regulation 14(1)(b);

the Commissioners” means the Commissioners for Her Majesty's Revenue and Customs;

contract of long-term insurance” means any contract falling within Part 2 of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F8;

correspondent relationship” has the meaning given by regulation 34(4);

credit institution” has the meaning given by regulation 10(1);

[F9cryptoasset exchange provider” has the meaning given by regulation 14A(1);

custodian wallet provider” has the meaning given by regulation 14A(2);]

customer due diligence measures” means the measures required by regulation 28, and where relevant, those required by regulations 29 and 33 to 37;

[F10the data protection legislation” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);]

Department for the Economy” means the Department for the Economy in Northern Ireland;

designated supervisory authority” has the meaning given by regulation 76(8);

document” means anything in which information of any description is recorded;

electronic money” has the meaning given by regulation 2(1) of the Electronic Money Regulations 2011 F11;

electronic money institution” has the meaning given by regulation 2(1) of the Electronic Money Regulations 2011;

electronic money issuer” has the meaning given in regulation 2(1) of the Electronic Money Regulations 2011;

eligible Scottish partnership” has the meaning given in regulation 3 of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (key terms) F12;

the emission allowance auctioning regulation” means Commission Regulation (EU) No 1031/2010 of 12th November 2010 on the timing, administration and other aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European Parliament and of the Council establishing a scheme for greenhouse gas emission allowances trading within the Community F13;

enactment” includes—

(a)

an enactment contained in subordinate legislation;

(b)

an enactment contained in, or in an instrument made under, an Act of the Scottish Parliament;

(c)

an enactment contained in, or in an instrument made under, a Measure or Act of the National Assembly for Wales; and

(d)

an enactment contained in, or in an instrument made under, Northern Ireland legislation;

enhanced customer due diligence measures” means the customer due diligence measures required under regulations 33 to 35;

estate agent” has the meaning given by regulation 13(1);

F14...

“external accountant” (except in regulation 31(4)) has the meaning given by regulation 11(c);

financial institution” has the meaning given by regulation 10(2);

firm” means any entity that, whether or not a legal person, is not an individual and includes a body corporate and a partnership or other unincorporated association;

fourth money laundering directive” means Directive 2015/849/EU of the European Parliament and of the Council of 20th May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing F15[F16, as amended by Directive 2018/843 of the European Parliament and of the Council of 30th May 2018]F17;

FSMA” means the Financial Services and Markets Act 2000 F18;

funds transfer regulation” means Regulation 2015/847/EU of the European Parliament and of the Council of 20th May 2015 on information accompanying transfers of funds F19;

F20...

group” has the meaning given by section 421 (group) of FSMA F21;

high value dealer” has the meaning given by regulation 14(1)(a);

independent legal professional” has the meaning given by regulation 12(1);

insolvency practitioner” has the meaning given by regulation 11(b);

law enforcement authority” has the meaning given by regulation 44(10);

[F22letting agent” has the meaning given by regulation 13(3);]

local weights and measures authority” has the meaning given by section 69 of the Weights and Measures Act 1985 (local weights and measures authorities) F23;

manager”, in relation to a firm, means a person who has control, authority or responsibility for managing the business of that firm, and includes a nominated officer;

markets in financial instruments directive” means Directive 2014/65/EU of the European Parliament and of the Council of 15th May 2014 on markets in financial instruments F24;

[F25markets in financial instruments regulation” means Regulation (EU) 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments (as that Regulation forms part of domestic law under section 3 of the European Union (Withdrawal) Act 2018);]

money laundering” has the meaning given by section 340(11) of the Proceeds of Crime Act 2002 F26;

money service business” means an undertaking which by way of business operates a currency exchange office, transmits money (or any representation of monetary value) by any means or cashes cheques which are made payable to customers;

the NCA” means the National Crime Agency;

nominated officer” means a person who is nominated to receive disclosures under Part 3 (terrorist property) of the Terrorism Act 2000 F27 or Part 7 (money laundering) of the Proceeds of Crime Act 2002;

notice” means a notice in writing;

occasional transaction” means a transaction which is not carried out as part of a business relationship;

“officer”, except in Part 8 and Schedule 5—

(a)

in relation to a body corporate, means—

(i)

a director, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, or

(ii)

an individual who is a controller of the body, or a person purporting to act as a controller;

(b)

in relation to an unincorporated association, means any officer of the association or any member of its governing body, or a person purporting to act in such a capacity; and

(c)

in relation to a partnership, means a partner, and any manager, secretary or similar officer of the partnership, or a person purporting to act in such a capacity;

“ongoing monitoring” (except where the context otherwise requires) means at least the measures described in regulation 28(11);

payment services” has the meaning given by regulation 2(1) of the Payment Services Regulations [F282017];

payment service provider” has the meaning given in regulation 2(1) of the Payment Services Regulations [F282017];

“politically exposed person” or “PEP” has the meaning given by regulation 35(12);

the PRA” means the Prudential Regulation Authority;

PRA-authorised person” has the meaning given by section 2B(5) of FSMA F29;

“regulated market”—

(a)

[F30within the United Kingdom, means a UK regulated market, as defined by Article 2(1)(13A) of the markets in financial instruments regulation;] and

(b)

[F31outside the United Kingdom, means—

(i)

within the EEA, an EU regulated market, as defined by Article 2(1)(13B) of the markets in financial instruments regulation; or

(ii)

outside the EEA, a regulated financial market which subjects companies whose securities are admitted to trading to disclosure obligations which are equivalent to the specified disclosure obligations;]

relevant parent undertaking” means a relevant person which is a parent undertaking;

relevant person” means a person to whom, in accordance with regulation 8, Parts 1 to 6 and 8 to 11 of these Regulations apply;

relevant requirement” has the meaning given by regulation 75;

self-regulatory organisation” means one of the professional bodies listed in Schedule 1 to these Regulations;

senior management” means an officer or employee of the relevant person with sufficient knowledge of the relevant person's money laundering and terrorist financing risk exposure, and of sufficient authority, to take decisions affecting its risk exposure;

F32...F33

specified disclosure obligations” means—

(a)

disclosure obligations set out in Articles 17 and 19 of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16th April 2014 on market abuse F34;

(b)

[F35disclosure obligations consistent with the requirements in—

(i)

sections 85, 87A and 87G of FSMA;

(ii)

prospectus rules within the meaning of Part 6 of FSMA (see section 73A(4) of FSMA) as those rules have effect on IP completion day;

(iii)

Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market; and

(iv)

Articles 6 to 10 of Commission Delegated Regulation (EU) 2016/301 of 30 November 2015 supplementing Directive 2003/71/EC of the European Parliament and of the Council with regard to regulatory technical standards for approval and publication of the prospectus and dissemination of advertisements and amending Commission Regulation (EC) No 809/2004; and]

(c)

[F36disclosure obligations consistent with the requirements in sections 4 and 5.5 of, and rules 6.1.1 to 6.1.15 in, the Disclosure Guidance and Transparency Rules source book made by the FCA under section 89A of FSMA as those rules have effect on IP completion day;] and

(d)

F37...

supervisory authority” in relation to—

(a)

any relevant person, means the supervisory authority specified for such a person by regulation 7;

(b)

any payment service provider, means the transfer of funds supervisory authority;

supervisory functions” means the functions given to a supervisory authority under these Regulations;

“tax adviser” (except in regulation 31(4)) has the meaning given by regulation 11(d);

telecommunication, digital and IT payment service provider” has the meaning given by regulation 53;

terrorist financing” means (except where the context otherwise requires) an act which constitutes an offence under—

(a)

section 15 (fund-raising), 16 (use and possession), 17 (funding arrangements), 18 (money laundering) or 63 (terrorist finance: jurisdiction) of the Terrorism Act 2000 F38;

(b)

paragraph 7(2) or (3) of Schedule 3 (freezing orders: offences) to the Anti-terrorism, Crime and Security Act 2001 F39;

(c)

[F40regulations 8 to 13, 25 or 26 of the ISIL (Da'esh) and Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 or regulations 11 to 16 of the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019;]; or

(ca)

[F41any of regulations 11 to 16 of the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019;]

(d)

section 11 (freezing of funds and economic resources), 12 (making funds or financial services available to designated person), 13 (making funds or financial services available for benefit of designated person), 14 (making economic resources available to designated person), 15 (making economic resources available for benefit of designated person) or 18 (circumventing prohibitions etc) of the Terrorist Asset-Freezing etc Act 2010 F42;

third country” means a state other than [F43the United Kingdom];

transfer of funds supervisory authority” means the supervisory authority specified for payment service providers in regulation 62;

trust or company service provider” has the meaning given in regulation 12(2).

[F44“UK auctioning regulations” means the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021;]

[F45the UK GDPR” has the same meaning as in Parts 5 to 7 of the Data Protection Act 2018 (see section 3(10) and (14) of that Act);]

[F46UK regulated market” means a recognised investment exchange within the meaning of section 285(1)(a) of FSMA, which is not an overseas investment exchange within the meaning of section 313(1) of FSMA.]

(2) In these Regulations—

(a)references to an amount in euros includes reference to an equivalent amount in any currency;

(b)the equivalent in sterling (or any other currency) on a particular day of a sum expressed in euros is determined by converting the sum in euros into its equivalent in sterling or that other currency using the London closing exchange rate for the euro and the relevant currency for the previous working day;

(c)references to “real property” include, in relation to Scotland, references to heritable property;

(d)references to business being carried on in the United Kingdom, or a person carrying on business in the United Kingdom, are to be read in accordance with regulation 9;

(e)references to a person having a “qualifying relationship” with a PRA-authorised person, or with an authorised person are to be read in accordance with section 415B(4) of FSMA F47;

(f)parent undertaking” and “subsidiary undertaking” have the same meaning as in the Companies Acts (see section 1162 of and Schedule 7 to, the Companies Act 2006 (parent and subsidiary undertaking) F48).

F6OJ L 176, 27.6.2013, p.338.

F8S.I. 2001/544. Part 2 of Schedule 1 was amended by S.I. 2005/2114 and 2015/575.

F13OJ L 302, 18.11.2010, p.1.

F15OJ L 141, 05.06.15, p. 73.

F17OJ L 156, 19.06.2018, p.43-74.

F19OJ L 141, 05.06.2015, p.1.

F21Section 421 was amended by S.I. 2008/948.

F231985 c.72. Section 69 was amended by Part 4 of Schedule 1 to the Statute Law (Repeals) Act 1989 (c. 43); paragraph 75 of Schedule 16 to the Local Government (Wales) Act 1994 (c. 19) and paragraph 144 of Schedule 13 to the Local Government etc (Scotland) Act 1994 (c.39).

F24OJ L 173, 12.06.2014, p.349.

F29Section 2B was substituted, with the rest of Part 1A of the Financial Services and Markets Act 2000 (c.8) for the original Part 1 of that Act by section 6(1) of the Financial Services Act 2012 (c.21).

F33OJ L 138, 23.05.2014, p.1.

F34OJ L 173, 12.6.2014, p.1.

F40Words in reg. 3(1) substituted (31.12.2020 immediately after IP completion day) by The Sanctions (EU Exit) (Miscellaneous Amendments) Regulations 2020 (S.I. 2020/591), regs. 1(2), 10(2); S.I. 2020/1514, reg. 5

F41Words in reg. 3(1) inserted (31.12.2020 immediately after IP completion day) by S.I. 2019/577, reg. 34D(2) (as inserted by The Sanctions (EU Exit) (Consequential Provisions) (Amendment) Regulations 2020 (S.I. 2020/1289), regs. 1(2), 4(2); S.I. 2020/1514, reg. 21)

F47Section 415B was inserted by paragraph 41 of Schedule 9 to the Financial Services Act 2012 (c.21).

Meaning of business relationshipU.K.

4.—(1) For the purpose of these Regulations, “business relationship” means a business, professional or commercial relationship between a relevant person and a customer, which—

(a)arises out of the business of the relevant person, and

(b)is expected by the relevant person, at the time when contact is established, to have an element of duration.

(2) A relationship where the relevant person is asked to form a company for its customer is to be treated as a business relationship for the purpose of these Regulations, whether or not the formation of the company is the only transaction carried out for that customer.

(3) For the purposes of these Regulations, an estate agent is to be treated as entering into a business relationship with a purchaser (as well as with a seller), at the point when the purchaser's offer is accepted by the seller.

Meaning of beneficial owner: bodies corporate or partnershipU.K.

5.—(1) In these Regulations, “beneficial owner”, in relation to a body corporate which is not a company whose securities are listed on a regulated market, means—

(a)any individual who exercises ultimate control over the management of the body corporate;

(b)any individual who ultimately owns or controls (in each case whether directly or indirectly), including through bearer share holdings or by other means, more than 25% of the shares or voting rights in the body corporate; or

(c)an individual who controls the body corporate.

(2) For the purposes of paragraph (1)(c), an individual controls a body corporate if—

(a)the body corporate is a company or a limited liability partnership and that individual satisfies one or more of the conditions set out in Part 1 of Schedule 1A to the Companies Act 2006 (people with significant control over a company) F17; or

(b)the body corporate would be a subsidiary undertaking of the individual (if the individual was an undertaking) under section 1162 (parent and subsidiary undertakings) of the Companies Act 2006 read with Schedule 7 to that Act.

(3) In these Regulations, “beneficial owner”, in relation to a partnership (other than a limited liability partnership), means any individual who—

(a)ultimately is entitled to or controls (in each case whether directly or indirectly) more than 25% share of the capital or profits of the partnership or more than 25% of the voting rights in the partnership;

(b)satisfies one or more the conditions set out in Part 1 of Schedule 1 to the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (references to people with significant control over an eligible Scottish partnership) F49; or

(c)otherwise exercises ultimate control over the management of the partnership.

(4) In this regulation “limited liability partnership” has the meaning given by the Limited Liability Partnerships Act 2000 F50.

F17OJ L 156, 19.06.2018, p.43-74.

Meaning of beneficial owner: trusts, similar arrangements and othersU.K.

6.—(1) In these Regulations, “beneficial owner”, in relation to a trust, means each of the following—

(a)the settlor;

(b)the trustees;

(c)the beneficiaries;

(d)where the individuals (or some of the individuals) benefiting from the trust have not been determined, the class of persons in whose main interest the trust is set up, or operates;

(e)any individual who has control over the trust.

(2) In paragraph (1)(e), “control” means a power (whether exercisable alone, jointly with another person or with the consent of another person) under the trust instrument or by law to—

(a)dispose of, advance, lend, invest, pay or apply trust property;

(b)vary or terminate the trust;

(c)add or remove a person as a beneficiary or to or from a class of beneficiaries;

(d)appoint or remove trustees or give another individual control over the trust;

(e)direct, withhold consent to or veto the exercise of a power mentioned in sub-paragraphs (a) to (d).

(3) In these Regulations, “beneficial owner”, in relation to a foundation or other legal arrangement similar to a trust, means those individuals who hold equivalent or similar positions to those set out in paragraph (1).

(4) For the purposes of paragraph (1)—

(a)where an individual is the beneficial owner of a body corporate which is entitled to a specified interest in the capital of the trust property or which has control over the trust, the individual is to be regarded as entitled to the interest or having control over the trust; and

(b)an individual (“P”) does not have control solely as a result of—

(i)P's consent being required in accordance with section 32(1)(c) (power of advancement) of the Trustee Act 1925 F51;

(ii)any discretion delegated to P under section 34 (power of investment and delegation) of the Pensions Act 1995 F52;

(iii)the power to give a direction conferred on P by section 19(2) (appointment and retirement of trustee at instance of beneficiaries) of the Trusts of Land and Appointment of Trustees Act 1996 F53; or

(iv)the power exercisable collectively at common law to vary or extinguish a trust where the beneficiaries under the trust are of full age and capacity and (taken together) absolutely entitled to the property subject to the trust (or, in Scotland, have a full and unqualified right to the fee).

(5) For the purposes of paragraph (4), “specified interest” means a vested interest which is—

(a)in possession or in remainder or reversion (or in Scotland, in fee); and

(b)defeasible or indefeasible.

(6) In these Regulations, “beneficial owner”, in relation to an estate of a deceased person in the course of administration, means—

(a)in England and Wales and Northern Ireland, the executor, original or by representation, or administrator for the time being of a deceased person;

(b)in Scotland, the executor for the purposes of the Executors (Scotland) Act 1900 F54.

(7) In these Regulations, “beneficial owner”, in relation to a legal entity or legal arrangement which does not fall within regulation 5 or paragraphs (1), (3) or (6) of this regulation, means—

(a)any individual who benefits from the property of the entity or arrangement;

(b)where the individuals who benefit from the entity or arrangement have yet to be determined, the class of persons in whose main interest the entity or arrangement is set up or operates;

(c)any individual who exercises control over the property of the entity or arrangement.

(8) For the purposes of paragraph (7), where an individual is the beneficial owner of a body corporate which benefits from or exercises control over the property of the entity or arrangement, the individual is to be regarded as benefiting from or exercising control over the property of the entity or arrangement.

(9) In these Regulations, “beneficial owner”, in any other case, means the individual who ultimately owns or controls the entity or arrangement or on whose behalf a transaction is being conducted.

F511925 (c.19). Section 32(1) was amended by section 9 of the Inheritance and Trustees' Powers Act 2014 (c.16).

F521995 (c.26). Section 34 was amended by paragraph 49 of Schedule 12 to the Pensions Act 2004 (c.35); section 5(3) of the Trustee Delegation Act 1999 (c.15) and S.I. 2001/3649.

Supervisory authoritiesU.K.

7.—(1) Subject to paragraph (2), the following bodies are supervisory authorities in relation to relevant persons—

(a)the FCA is the supervisory authority for—

(i)credit and financial institutions (including money service businesses) which are authorised persons but not excluded money service businesses;

(ii)trust or company service providers which are authorised persons;

(iii)Annex 1 financial institutions;

(iv)electronic money institutions;

(v)auction platforms;

(vi)credit unions in Northern Ireland;

(vii)recognised investment exchanges within the meaning of section 285 of FSMA F55 (exemption for recognised investment exchanges [F56, clearing houses and central securities depositories]);

[F57(viii)cryptoasset exchange providers;

(ix)custodian wallet providers;]

(b)each of the professional bodies listed in Schedule 1 is the supervisory authority for relevant persons who are members of it, or regulated or supervised by it;

(c)the Commissioners are the supervisory authority for—

(i)high value dealers;

(ii)money service businesses which are not supervised by the FCA;

(iii)trust or company service providers which are not supervised by the FCA or one of the professional bodies listed in Schedule 1;

(iv)auditors, external accountants and tax advisers who are not supervised by one of the professional bodies listed in Schedule 1;

(v)bill payment service providers which are not supervised by the FCA;

(vi)telecommunication, digital and IT payment service providers which are not supervised by the FCA;

(vii)estate agents [F58and letting agents] which are not supervised by one of the professional bodies listed in Schedule 1;

[F59(viii)art market participants;]

(d)the Gambling Commission is the supervisory authority for casinos.

(2) Where under paragraph (1), there is more than one supervisory authority for a relevant person, the supervisory authorities may agree that one of them will act as the supervisory authority for that person.

(3) Where there has been an agreement under paragraph (2), the authority which has agreed to act as the supervisory authority must notify the relevant person or publish the agreement in such manner as it considers appropriate.

(4) Where there has not been an agreement under paragraph (2), the supervisory authorities for a relevant person must co-operate in the performance of their functions under these Regulations.

(5) For the purposes of paragraph (1)(a)(i), a money service business is an “excluded money service business” if it is an authorised person who has permission under FSMA which relates to or is connected with a contract of the kind mentioned in paragraph 23 or 23B of Schedule 2 F60 to that Act (credit agreements and contracts for hire of goods) but does not have permission to carry on any other kind of regulated activity.

(6) Paragraph (5) must be read with—

(a)section 22 of FSMA (regulated activities) F61;

(b)any relevant order under that section; and

(c)Schedule 2 to that Act.

(7) For the purposes of paragraph (1), a credit union in Northern Ireland is a credit union which is—

(a)registered under regulation 3 of the Credit Unions (Northern Ireland) Order 1985 F62 (registration) and it is an authorised person; or

(b)registered under Part 2 of the Industrial and Provident Societies Act (Northern Ireland) 1969 F63 (registered societies) as a credit union and it is an authorised person.

F55Section 285 was amended by section 28 of the Financial Services and Markets Act 2000 (c.8); and S.I. 2013/504.

F60Paragraph 23 was substituted, and paragraph 23B was inserted, by section 7 of the Financial Services Act 2012 (c.21).

F61Section 22 was amended by section 7 of the Financial Services Act 2012.

F631969 c.24. Part 2 was amended, but the amendments are not relevant to these Regulations.

PART 2 U.K.Money Laundering and Terrorist Financing

CHAPTER 1U.K.Application

ApplicationU.K.

8.—(1) Parts 1 to 6 and 8 to 11 apply to the persons (“relevant persons”) acting in the course of business carried on by them in the United Kingdom, who—

(a)are listed in paragraph (2); and

(b)do not come within the exclusions set out in regulation 15.

(2) The persons listed in this paragraph are—

(a)credit institutions;

(b)financial institutions;

(c)auditors, insolvency practitioners, external accountants and tax advisers;

(d)independent legal professionals;

(e)trust or company service providers;

(f)estate agents [F64and letting agents];

(g)high value dealers;

(h)casinos;

[F65(i)art market participants;

(j)cryptoasset exchange providers;

(k)custodian wallet providers.]

(3) Regulations 3, 7, 9, 15, 17 to 21, 24, 25, 46, 47, 50 to 52, 65 to 82, 84, 86 to 93, 101, 102 and 106 apply to an auction platform acting in the course of business carried on by it in the United Kingdom, and such an auction platform is a relevant person for the purposes of those provisions.

(4) The definitions in regulations 10 to 14 apply for the purposes of this regulation.

Carrying on business in the United KingdomU.K.

9.—(1) For the purposes of these Regulations, a relevant person (“A”) is to be regarded as carrying on business in the United Kingdom in the cases described in this regulation even if A would not otherwise be regarded as doing so.

F66(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) The second case is where—

(a)A's registered office (or if A does not have a registered office, A's head office) is in the United Kingdom; and

(b)the day-to-day management of the carrying on of A's business is the responsibility of—

(i)that office, or

(ii)another establishment maintained by A in the United Kingdom.

(4) The third case is where—

(a)A is a casino which provides facilities for remote gambling (within the meaning of section 4 of the Gambling Act 2005 (remote gambling) F67) and—

(b)either—

(i)at least one piece of remote gambling equipment (within the meaning of section 36(4) of the Gambling Act 2005 (territorial application)) is situated in Great Britain, or

(ii)no such equipment is situated in Great Britain but the facilities provided by A are used there.

(5) For the purposes of [F68paragraph (3)]

F69(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)it is irrelevant where the person with whom the business is carried on is situated.

Credit institutions and financial institutionsU.K.

10.—(1) In these Regulations, “credit institution” means—

(a)a credit institution as defined in Article 4.1(1) of the capital requirements regulation; or

(b)a branch (as defined by Article 4.1(17) of that regulation) located in [F70the United Kingdom] of an institution falling within sub-paragraph (a) (or an equivalent institution whose head office is located in a third country) wherever the institution's head office is located,

when it accepts deposits or other repayable funds from the public or grants credits for its own account (within the meaning of the capital requirements regulation), or when it bids directly in auctions in accordance with the emission allowance auctioning regulation [F71or the UK auctioning regulations] on behalf of its clients.

(2) In these Regulations, “financial institution” means—

(a)an undertaking, including a money service business, other than an institution referred to in paragraph (3), when the undertaking carries out one or more listed activity;

[F72(b)an authorised person (within the meaning of section 31 of FSMA), who has permission under Part 4A of FSMA to carry out or effect contracts of insurance, when carrying out or effecting any contract of long-term insurance (an “insurance undertaking”);]

(c)a person (other than [F73a person falling within one of the exclusions to the definition of “investment firm” in article 3(1) of the Regulated Activities Order]), whose regular occupation or business is the provision to other persons of an investment service or the performance of an investment activity on a professional basis, when—

(i)providing investment services or performing investment activities ([F74within the meaning of that article]); or

(ii)bidding directly in auctions in accordance with the emission allowance auctioning regulation [F75or the UK auctioning regulations] on behalf of its clients;

(d)a person falling within [F76paragraph 1(k) of Part 1 of Schedule 3 to the Regulated Activities Order], when bidding directly in auctions in accordance with the emission allowance auctioning regulation [F77or the UK auctioning regulations] on behalf of clients of the person's main business;

(e)a collective investment undertaking, when marketing or otherwise offering its units or shares;

(f)an insurance intermediary as defined in Article 2.5 of Directive 2002/92/EC of the European Parliament and of the Council of 9th December 2002 on insurance mediation F78, with the exception of a tied insurance intermediary as mentioned in Article 2.7 of that Directive [F79(and for this purpose, Article 2.7 is to be read as if “insurance undertaking” has the meaning given in sub-paragraph (b))], when it acts in respect of contracts of long-term insurance;

(g)a branch located in [F80the United Kingdom] of a person referred to in sub-paragraphs (a) to (f) (or an equivalent person whose head office is located in a third country), wherever the person's head office is located, when carrying out any activity mentioned in sub-paragraphs (a) to (f);

(h)the National Savings Bank;

(i)the Director of Savings, when money is raised under the auspices of the Director under the National Loans Act 1968 F81.

(3) For the purposes of paragraph (2)(a), the institutions referred to are—

(a)a credit institution;

(b)an undertaking whose only listed activity is as a creditor under an agreement which—

(i)falls within section 12(a) of the Consumer Credit Act 1974 F82 (debtor-creditor-supplier agreements);

(ii)provides fixed sum credit (within the meaning given in section 10(1)(b) of the Consumer Credit Act 1974 (running-account credit and fixed-sum credit)) in relation to the provision of services; and

(iii)provides financial accommodation by way of deferred payment or payment by instalments over a period not exceeding 12 months;

(c)an undertaking whose only listed activity is trading for its own account in one or more of the products listed in point 7 of Annex 1 to the capital requirements directive [F83as set out in Schedule 2] where the undertaking does not have a customer (and, for this purpose, “customer” means a person other than the undertaking which is not a member of the same group as the undertaking).

[F84(4) For the purposes of this regulation—

(a)a “listed activity” means an activity listed in points 2 to 12, 14 and 15 of Annex 1 to the capital requirements directive as set out in Schedule 2;

(b)Regulated Activities Order” means the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.]

F78OJ L 9, 15.01.2003, p.3.

Auditors and othersU.K.

11.  In these Regulations—

(a)auditor” means any firm or individual who is—

(i)a statutory auditor within the meaning of Part 42 of the Companies Act 2006 F85 (statutory auditors), when carrying out statutory audit work within the meaning of section 1210 of that Act (meaning of statutory auditor), or

(ii)a local auditor within the meaning of section 4(1) of the Local Audit and Accountability Act 2014 (general requirements for audit) F86, when carrying out an audit required by that Act.

(b)insolvency practitioner” means any firm or individual who acts as an insolvency practitioner within the meaning of section 388 of the Insolvency Act 1986 F87 or article 3 of the Insolvency (Northern Ireland) Order 1989 F88 (meaning of “act as insolvency practitioner”).

(c)external accountant” means a firm or sole practitioner who by way of business provides accountancy services to other persons, when providing such services.

(d)tax adviser” means a firm or sole practitioner who by way of business provides [F89material aid, or assistance or advice, in connection with the tax affairs of other persons, whether provided directly or through a third party], when providing such services.

Independent legal professionals and trust or company service providersU.K.

12.—(1) In these Regulations, “independent legal professional” means a firm or sole practitioner who by way of business provides legal or notarial services to other persons, when participating in financial or real property transactions concerning—

(a)the buying and selling of real property or business entities;

(b)the managing of client money, securities or other assets;

(c)the opening or management of bank, savings or securities accounts;

(d)the organisation of contributions necessary for the creation, operation or management of companies; or

(e)the creation, operation or management of trusts, companies, foundations or similar structures,

and, for this purpose, a person participates in a transaction by assisting in the planning or execution of the transaction or otherwise acting for or on behalf of a client in the transaction.

(2) In these Regulations, “trust or company service provider” means a firm or sole practitioner who by way of business provides any of the following services to other persons, when that firm or practitioner is providing such services—

(a)forming companies or other legal persons;

(b)acting, or arranging for another person to act—

(i)as a director or secretary of a company;

(ii)as a partner of a partnership; or

(iii)in a similar capacity in relation to other legal persons;

(c)providing a registered office, business address, correspondence or administrative address or other related services for a company, partnership or any other legal person or legal arrangement;

(d)acting, or arranging for another person to act, as—

(i)a trustee of an express trust or similar legal arrangement; or

(ii)a nominee shareholder for a person other than a company whose securities are listed on a regulated market.

Estate agents [F90and letting agents]U.K.

13.—(1) In these Regulations, “estate agent” means a firm or a sole practitioner, who, or whose employees, carry out estate agency work, when the work is being carried out.

(2) For the purposes of paragraph (1) “estate agency work” is to be read in accordance with section 1 of the Estate Agents Act 1979 F91 (estate agency work), but for those purposes references in that section to disposing of or acquiring an interest in land are (despite anything in section 2 of that Act) to be taken to include references to disposing of or acquiring an estate or interest in land outside the United Kingdom where that estate or interest is capable of being owned or held as a separate interest.

[F92(3) In these Regulations, “letting agent” means a firm or sole practitioner who, or whose employees, carry out letting agency work, when carrying out such work.

(4) For the purposes of paragraph (3), “letting agency work” means work—

(a)consisting of things done in response to instructions received from—

(i)a person (a “prospective landlord”) seeking to find another person to whom to let land, or

(ii)a person (a “prospective tenant”) seeking to find land to rent, and

(b)done in a case where an agreement is concluded for the letting of land—

(i)for a term of a month or more, and

(ii)at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.

(5) For the purposes of paragraph (3) “letting agency work” does not include the things listed in paragraph (6) when done by, or by employees of, a firm or sole practitioner if neither the firm or sole practitioner, nor any of their employees, does anything else within paragraph (4).

(6) Those things are—

(a)publishing advertisements or disseminating information;

(b)providing a means by which a prospective landlord or a prospective tenant can, in response to an advertisement or dissemination of information, make direct contact with a prospective tenant or a prospective landlord;

(c)providing a means by which a prospective landlord and a prospective tenant can communicate directly with each other;

(d)the provision of legal or notarial services by a barrister, advocate, solicitor or other legal representative communications with whom may be the subject of a claim to professional privilege or, in Scotland, protected from disclosure in legal proceedings on grounds of confidentiality of communication.

(7) In paragraph (4) “land” includes part of a building and part of any other structure.]

High value dealers, [F93casinos, auction platforms and art market participants]U.K.

14.—(1) In these Regulations—

(a)high value dealer” means a firm or sole trader who by way of business trades in goods (including an auctioneer dealing in goods), when the trader makes or receives, in respect of any transaction, a payment or payments in cash of at least 10,000 euros in total, whether the transaction is executed in a single operation or in several operations which appear to be linked;

(b)casino” means the holder of a casino operating licence and, for this purpose, a “casino operating licence” has the meaning given by section 65(2)(a) of the Gambling Act 2005 F94 (nature of licence);

(c)auction platform” means a platform which auctions two-day spot or five-day futures, within the meanings given by [F95regulation 2(1) of the UK auctioning regulations], when it carries out activities covered by that regulation.

[F96(d)art market participant” means a firm or sole practitioner who—

(i)by way of business trades in, or acts as an intermediary in the sale or purchase of, works of art and the value of the transaction, or a series of linked transactions, amounts to 10,000 euros or more; or

(ii)is the operator of a freeport when it, or any other firm or sole practitioner, by way of business stores works of art in the freeport and the value of the works of art so stored for a person, or a series of linked persons, amounts to 10,000 euros or more;

(e)freeport” means a warehouse or storage facility within an area designated by the Treasury as a special area for customs purposes pursuant to section 100A(1) of the Customs and Excise Management Act 1979 (designation of free zones) F97;

(f)work of art” means anything which, in accordance with section 21(6) to (6B) of the Value Added Tax Act 1994 (value of imported goods) F98, is a work of art for the purposes of section 21(5)(a) of that Act.]

(2) A payment does not cease to be a “payment in cash” for the purposes of paragraph (1)(a) if cash is paid by or on behalf of the person making the payment—

(a)to a person other than the other party to the transaction for the benefit of the other party, or

(b)into a bank account for the benefit of the other party to the transaction.

F97 1979 c. 2. Section 100A was inserted by the Finance Act 1984 (c.2), section 8 and (c.43), Schedule 4.

F98 1994 c. 23. Sections 21(6) to (6B) were inserted by section 12(2) of the Finance Act 1999 (c.16).

[F99Cryptoasset exchange providers and custodian wallet providersU.K.

14A.(1) In these Regulations, “cryptoasset exchange provider” means a firm or sole practitioner who by way of business provides one or more of the following services, including where the firm or sole practitioner does so as creator or issuer of any of the cryptoassets involved, when providing such services—

(a)exchanging, or arranging or making arrangements with a view to the exchange of, cryptoassets for money or money for cryptoassets,

(b)exchanging, or arranging or making arrangements with a view to the exchange of, one cryptoasset for another, or

(c)operating a machine which utilises automated processes to exchange cryptoassets for money or money for cryptoassets.

(2) In these Regulations, “custodian wallet provider” means a firm or sole practitioner who by way of business provides services to safeguard, or to safeguard and administer—

(a)cryptoassets on behalf of its customers, or

(b)private cryptographic keys on behalf of its customers in order to hold, store and transfer cryptoassets,

when providing such services.

(3) For the purposes of this regulation—

(a)“cryptoasset” means a cryptographically secured digital representation of value or contractual rights that uses a form of distributed ledger technology and can be transferred, stored or traded electronically;

(b)“money” means—

(i)money in sterling,

(ii)money in any other currency, or

(iii)money in any other medium of exchange,

but does not include a cryptoasset; and

(c)in sub-paragraphs (a), (b) and (c) of paragraph (1), “cryptoasset” includes a right to, or interest in, the cryptoasset.]

ExclusionsU.K.

15.—(1) Parts 1 to 4, 6 and 8 to 11 do not apply to the following persons when carrying on any of the following activities—

(a)a registered society within the meaning of section 1 of the Co-operative and Community Benefit Societies Act 2014 (meaning of “registered society”) F97, when it—

(i)issues withdrawable share capital within the limit set by section 24 of that Act (maximum shareholding in society); or

(ii)accepts deposits from the public within the limit set by section 67(2) of that Act (carrying on of banking by societies);

(b)a society registered under the Industrial and Provident Societies Act (Northern Ireland) 1969 F98, when it—

(i)issues withdrawable share capital within the limit set by section 6 F100 of that Act (maximum shareholding in society); or

(ii)accepts deposits from the public within the limit set by section 7(3) of that Act (carrying on of banking by societies);

(c)a person who is (or falls within a class of persons) specified in any of paragraphs 2 to 23, 26 to 38 or 40 to 49 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 F101, when carrying out any activity in respect of which that person is exempt;

(d)a local authority within the meaning given in article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F102, when carrying on an activity which would be a regulated activity for the purposes of FSMA but for article 72G of that Order F103;

(e)a person who was an exempted person for the purposes of section 45 of the Financial Services Act 1986 F104 (miscellaneous exemptions) immediately before its repeal, when exercising the functions specified in that section;

(f)a person whose main activity is that of a high value dealer, when engaging in financial activity on an occasional or very limited basis as set out in paragraph (3); or

(g)a person preparing a home report, which for these purposes means the documents prescribed for the purposes of section 98, 99(1) or 101(2) of the Housing (Scotland) Act 2006 (duties: information and others) F105.

(2) These Regulations do not apply to a person who falls within regulation 8 solely as a result of that person engaging in financial activity on an occasional or very limited basis as set out in paragraph (3).

(3) For the purposes of paragraphs (1)(f) and (2), a person is to be considered as engaging in financial activity on an occasional or very limited basis if all the following conditions are met—

(a)the person's total annual turnover in respect of the financial activity does not exceed £100,000;

(b)the financial activity is limited in relation to any customer to no more than one transaction exceeding 1,000 euros, whether the transaction is carried out in a single operation, or a series of operations which appear to be linked;

(c)the financial activity does not exceed 5% of the person's total annual turnover;

(d)the financial activity is ancillary and directly related to the person's main activity;

(e)the financial activity is not the transmission or remittance of money (or any representation of monetary value) by any means;

(f)the person's main activity is not that of a person falling within regulation 8(2)(a) to (f) or (h);

(g)the financial activity is provided only to customers of the main activity of the person and is not offered to the public.

(4) Chapters 2 and 3 of Part 2, and Parts 3 to 9, do not apply to—

(a)the Auditor General for Scotland;

(b)the Auditor General for Wales;

(c)the Bank of England;

(d)the Comptroller and Auditor General;

(e)the Comptroller and Auditor General for Northern Ireland;

(f)the Official Solicitor to the Supreme Court, when acting as trustee in his or her official capacity;

(g)the Treasury Solicitor.

F97 1979 c. 2. Section 100A was inserted by the Finance Act 1984 (c.2), section 8 and (c.43), Schedule 4.

F98 1994 c. 23. Sections 21(6) to (6B) were inserted by section 12(2) of the Finance Act 1999 (c.16).

F101S.I. 2001/1201. Paragraph 15A was inserted by S.I. 2003/47; paragraph 15B was inserted by S.I. 2009/118; paragraph 19 was revoked by S.I. 2014/366; paragraphs 21 and 27 were substituted by S.I. 2002/1310 and 2003/1675 respectively; paragraph 30 was revoked by S.I. 2003/3225; paragraph 31 was substituted by paragraph 10 of Schedule 2 to the Tourist Boards (Scotland) Act 2006 (asp 15) and amended by S.I. 2007/1103; paragraph 33A was inserted by S.I. 2007/1821; paragraphs 34A, 34B and 34C were inserted by SI. 2005/592, 2008/682 and 2012/763 respectively; paragraph 36 was revoked by S.I. 2007/125; paragraph 40 was amended by S.I. 2013/1881; paragraph 41 was amended by S.I. 2010/86; paragraph 42 was amended by S.I. 2007/125; paragraph 44 was amended by S.I. 2014/506; paragraph 45 was amended by S.I. 2013/1773; paragraph 47 was revoked by S.I. 2014/366; paragraph 48 was substituted by S.I. 2003/1673 and paragraph 49 was inserted by S.I. 2001/3623

F102S.I. 2001/544. Article 3(1) was amended, but the amendments are not relevant to these Regulations.

F103Article 72G was inserted by S.I. 2014/366, and amended by S.I. 2015/910 and 2016/392.

F1041986 c.60. Section 45 was repealed by S.I. 2001/3649.

CHAPTER 2U.K.Risk assessment and controls

Risk assessment by the Treasury and Home OfficeU.K.

16.—(1) The Treasury and the Home Office must make arrangements before 26th June 2018 for a risk assessment to be undertaken to identify, assess, understand and mitigate the risks of money laundering and terrorist financing affecting the United Kingdom (“the risk assessment”).

(2) The risk assessment must, among other things—

(a)identify any areas where relevant persons should apply enhanced customer due diligence measures, and where appropriate, specify the measures to be taken;

(b)identify, where appropriate, the sectors or areas of lower and greater risk of money laundering and terrorist financing;

(c)consider whether any rules on money laundering and terrorist financing made by a supervisory authority applying in relation to the sector it supervises are appropriate in the light of the risks of money laundering and terrorist financing applying to that sector;

(d)provide the information and analysis necessary to enable it to be used for the purposes set out in paragraph (3).

(3) The Treasury and the Home Office must ensure that the risk assessment is used to—

(a)consider the appropriate allocation and prioritisation of resources to counter money laundering and terrorist financing;

(b)consider whether the exclusions provided for in regulation 15 are being abused;

(c)consider whether providers of gambling services other than casinos should continue to be excluded from the requirements of these Regulations.

(4) For the purpose of paragraph (3)(c), a “provider of gambling services” means a person who by way of business provides facilities for gambling within the meaning of section 5 of the Gambling Act 2005 (facilities for gambling) F106.

F107(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) The Treasury and the Home Office must prepare a joint report setting out, as appropriate, the findings of the risk assessment as soon as reasonably practicable after the risk assessment is completed.

[F108(6A) The report must also set out—

(a)the institutional structure and broad procedures of the United Kingdom’s anti-money laundering and counter-terrorist financing regime, including the role of the financial intelligence unit, tax agencies and prosecutors;

(b)the nature of measures taken and resources allocated to counter money laundering and terrorist financing.]

(7) A copy of that report must be laid before Parliament, and sent to—

(a)the PRA;

(b)the supervisory authorities;

F109(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F110(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F111(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) If information from the risk assessment would assist the supervisory authorities in carrying out their own money laundering and terrorist financing risk assessment, the Treasury and the Home Office must, where appropriate, make that information available to those supervisory authorities, unless to do so would not be compatible with restrictions on sharing information imposed by or under [F112

(a)the Data Protection Act 2018 or any other enactment, or

(b)the [F113UK GDPR].]

(9) The Treasury and the Home Office must take appropriate steps to ensure that the risk assessment is kept up-to-date.

F112Words in reg. 16(8) substituted (25.5.2018) by Data Protection Act 2018 (c. 12), s. 212(1), Sch. 19 para. 412 (with ss. 117, 209, 210); S.I. 2018/625, reg. 2(1)(g)

Risk assessment by supervisory authoritiesU.K.

17.—(1) Each supervisory authority must identify and assess the international and domestic risks of money laundering and terrorist financing to which those relevant persons for which it is the supervisory authority (“its own sector”) are subject.

(2) In carrying out the risk assessment required under paragraph (1), the supervisory authority must take into account—

F114(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F115(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)the report prepared by the Treasury and the Home Office under regulation 16(6); and

(d)information made available by the Treasury and the Home Office under regulation 16(8).

(3) A supervisory authority must keep an up-to-date record in writing of all the steps it has taken under paragraph (1).

(4) Each supervisory authority must develop and record in writing risk profiles for each relevant person in its own sector.

(5) A supervisory authority may prepare a single risk profile under paragraph (4) in relation to two or more relevant persons in its sector, if—

(a)the relevant persons share similar characteristics; and

(b)the risks of money laundering and terrorist financing affecting those relevant persons do not differ significantly.

(6) Where a supervisory authority has prepared a single risk profile for two or more relevant persons in its sector (a “cluster”), the supervisory authority must keep under review whether an individual risk profile should be prepared in relation to any relevant person in the cluster because sub-paragraph (a) or (b) (or both sub-paragraphs) of paragraph (5) are no longer satisfied in relation to that person.

(7) In developing the risk profiles referred to in paragraph (4), the supervisory authority must take full account of the risks that relevant persons in its own sector will not take appropriate action to identify, understand and mitigate money laundering and terrorist financing risks.

(8) Each supervisory authority must review the risk profiles developed under paragraph (4) at regular intervals and following any significant event or developments which might affect the risks to which its own sector is subject, such as—

(a)significant external events that change the nature of the money laundering or terrorist financing risks;

(b)emerging money laundering or terrorist financing risks;

(c)any findings resulting from measures taken by other supervisory authorities;

(d)any changes in the way in which its own sector is operated;

(e)significant changes in regulation.

(9) If information from the risk assessment carried out under paragraph (1), or from information provided to the supervisory authority under regulation 16(8), would assist relevant persons in carrying out their own money laundering and terrorist financing risk assessment, the supervisory authority must, where appropriate, make that information available to those persons, unless to do so would not be compatible with restrictions on sharing information imposed by or under [F116

(a)the Data Protection Act 2018 or any other enactment, or

(b)the [F117UK GDPR].]

Risk assessment by relevant personsU.K.

18.—(1) A relevant person must take appropriate steps to identify and assess the risks of money laundering and terrorist financing to which its business is subject.

(2) In carrying out the risk assessment required under paragraph (1), a relevant person must take into account—

(a)information made available to them by the supervisory authority under regulations 17(9) and 47, and

(b)risk factors including factors relating to—

(i)its customers;

(ii)the countries or geographic areas in which it operates;

(iii)its products or services;

(iv)its transactions; and

(v)its delivery channels.

(3) In deciding what steps are appropriate under paragraph (1), the relevant person must take into account the size and nature of its business.

(4) A relevant person must keep an up-to-date record in writing of all the steps it has taken under paragraph (1), unless its supervisory authority notifies it in writing that such a record is not required.

(5) A supervisory authority may not give the notification referred to in paragraph (4) unless it considers that the risks of money laundering and terrorist financing applicable to the sector in which the relevant person operates are clear and understood.

(6) A relevant person must provide the risk assessment it has prepared under paragraph (1), the information on which that risk assessment was based and any record required to be kept under paragraph (4), to its supervisory authority on request.

Policies, controls and proceduresU.K.

19.—(1) A relevant person must—

(a)establish and maintain policies, controls and procedures to mitigate and manage effectively the risks of money laundering and terrorist financing identified in any risk assessment undertaken by the relevant person under regulation 18(1);

(b)regularly review and update the policies, controls and procedures established under sub-paragraph (a);

(c)maintain a record in writing of—

(i)the policies, controls and procedures established under sub-paragraph (a);

(ii)any changes to those policies, controls and procedures made as a result of the review and update required by sub-paragraph (b); and

(iii)the steps taken to communicate those policies, controls and procedures, or any changes to them, within the relevant person's business.

(2) The policies, controls and procedures adopted by a relevant person under paragraph (1) must be—

(a)proportionate with regard to the size and nature of the relevant person's business, and

(b)approved by its senior management.

(3) The policies, controls and procedures referred to in paragraph (1) must include—

(a)risk management practices;

(b)internal controls (see regulations 21 to 24);

(c)customer due diligence (see regulations 27 to 38);

(d)reliance and record keeping (see regulations 39 to 40);

(e)the monitoring and management of compliance with, and the internal communication of, such policies, controls and procedures.

(4) The policies, controls and procedures referred to in paragraph (1) must include policies, controls and procedures—

(a)which provide for the identification and scrutiny of—

(i)any case where—

(aa)a transaction is complex [F118or] unusually large, or there is an unusual pattern of transactions, [F119or]

(bb)the transaction or transactions have no apparent economic or legal purpose, and

(ii)any other activity or situation which the relevant person regards as particularly likely by its nature to be related to money laundering or terrorist financing;

(b)which specify the taking of additional measures, where appropriate, to prevent the use for money laundering or terrorist financing of products and transactions which might favour anonymity;

(c)which ensure that when [F120new products, new business practices (including new delivery mechanisms) or new technology are] adopted by the relevant person, appropriate measures are taken in preparation for, and during, the adoption of such [F121products, practices or] technology to assess and if necessary mitigate any money laundering or terrorist financing risks this new [F122product, practice or] technology may cause;

(d)under which anyone in the relevant person's organisation who knows or suspects (or has reasonable grounds for knowing or suspecting) that a person is engaged in money laundering or terrorist financing as a result of information received in the course of the business or otherwise through carrying on that business is required to comply with—

(i)Part 3 of the Terrorism Act 2000 F123; or

(ii)Part 7 of the Proceeds of Crime Act 2002 F124;

(e)which, in the case of a money service business that uses agents for the purpose of its business, ensure that appropriate measures are taken by the business to assess—

(i)whether an agent used by the business would satisfy the fit and proper test provided for in regulation 58; and

(ii)the extent of the risk that the agent may be used for money laundering or terrorist financing.

(5) In determining what is appropriate or proportionate with regard to the size and nature of its business, a relevant person may take into account any guidance which has been—

(a)issued by the FCA; or

(b)issued by any other supervisory authority or appropriate body and approved by the Treasury.

(6) A relevant person must, where relevant, communicate the policies, controls and procedures which it establishes and maintains in accordance with this regulation to its branches and subsidiary undertakings which are located outside the United Kingdom.

Policies, controls and procedures: group levelU.K.

20.—(1) A relevant parent undertaking must—

(a)ensure that the policies, controls and procedures referred to in regulation 19(1) apply—

(i)to all its subsidiary undertakings, including subsidiary undertakings located outside the United Kingdom; and

(ii)to any branches it has established outside the United Kingdom;

which is carrying out any activity in respect of which the relevant person is subject to these Regulations;

(b)establish and maintain throughout its group the policies, controls and procedures for data protection and sharing information for the purposes of preventing money laundering and terrorist financing with other members of the group [F125, including policies on the sharing of information about customers, customer accounts and transactions;]

(c)regularly review and update the policies, controls and procedures applied and established under sub-paragraphs (a) and (b);

(d)maintain a record in writing of—

(i)the policies, controls and procedures established under sub-paragraphs (a) and (b);

(ii)any changes to those policies, controls and procedures made as a result of the review and update required by sub-paragraph (c); and

(iii)the steps taken to communicate those policies, controls and procedures, or any changes to them, to its subsidiary undertakings and branches.

F126(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) If any of the subsidiary undertakings or branches of a relevant parent undertaking are established in a third country which does not impose requirements to counter money laundering and terrorist financing as strict as those of the United Kingdom, the relevant parent undertaking must ensure that those subsidiary undertakings and branches apply measures equivalent to those required by these Regulations, as far as permitted under the law of the third country.

(4) Where the law of a third country does not permit the application of such equivalent measures by the subsidiary undertaking or branch established in that country, the relevant parent undertaking must—

(a)inform its supervisory authority accordingly; and

(b)take additional measures to handle the risk of money laundering and terrorist financing effectively.

(5) A relevant parent undertaking must ensure that information relevant to the prevention of money laundering and terrorist financing is shared as appropriate between members of its group, subject to any restrictions on sharing information imposed by or under any enactment or otherwise.

[F127(6) The FCA may make technical standards specifying—

(a)what additional measures are required from credit institutions and financial institutions under paragraph (4); and

(b)the minimum action to be taken by credit institutions and financial institutions where paragraph (4) applies.]

Internal controlsU.K.

21.—(1) Where appropriate with regard to the size and nature of its business, a relevant person must—

(a)appoint one individual who is a member of the board of directors (or if there is no board, of its equivalent management body) or of its senior management as the officer responsible for the relevant person's compliance with these Regulations;

(b)carry out screening of relevant employees appointed by the relevant person, both before the appointment is made and during the course of the appointment;

(c)establish an independent audit function with the responsibility—

(i)to examine and evaluate the adequacy and effectiveness of the policies, controls and procedures adopted by the relevant person to comply with the requirements of these Regulations;

(ii)to make recommendations in relation to those policies, controls and procedures; and

(iii)to monitor the relevant person's compliance with those recommendations.

(2) For the purposes of paragraph (1)(b)—

(a)screening” means an assessment of—

(i)the skills, knowledge and expertise of the individual to carry out their functions effectively;

(ii)the conduct and integrity of the individual;

(b)a relevant employee is an employee whose work is—

(i)relevant to the relevant person's compliance with any requirement in these Regulations, or

(ii)otherwise capable of contributing to the—

(aa)identification or mitigation of the risks of money laundering and terrorist financing to which the relevant person's business is subject, or

(bb)prevention or detection of money laundering and terrorist financing in relation to the relevant person's business.

(3) An individual in the relevant person's firm must be appointed as a nominated officer.

(4) A relevant person must, within 14 days of the appointment, inform its supervisory authority of—

(a)the identity of the individual first appointed under paragraph (1)(a);

(b)the identity of the individual first appointed under paragraph (3); and

(c)of any subsequent appointment to either of those positions.

(5) Where a disclosure is made to the nominated officer, that officer must consider it in the light of any relevant information which is available to the relevant person and determine whether it gives rise to knowledge or suspicion or reasonable grounds for knowledge or suspicion that a person is engaged in money laundering or terrorist financing.

(6) Paragraphs (1) and (3) do not apply where the relevant person is an individual who neither employs nor acts in association with any other person.

(7) A relevant person who is an electronic money issuer or a payment service provider must appoint an individual to monitor and manage compliance with, and the internal communication of, the policies, controls and procedures adopted by the relevant person under regulation 19(1), and in particular to—

(a)identify any situations of higher risk of money laundering or terrorist financing;

(b)maintain a record of its policies, controls and procedures, risk assessment and risk management including the application of such policies and procedures;

(c)apply measures to ensure that its policies, controls and procedures are taken into account in all relevant functions including in the development of new products, dealing with new customers and in changes to business activities; and

(d)provide information to senior management about the operation and effectiveness of its policies, controls and procedures whenever appropriate and at least annually.

(8) A relevant person must establish and maintain systems which enable it to respond fully and rapidly to enquiries from any person specified in paragraph (9) as to—

(a)whether it maintains, or has maintained during the previous five years, a business relationship with any person; and

(b)the nature of that relationship.

(9) The persons specified in this paragraph are—

(a)financial investigators accredited under section 3 of the Proceeds of Crime Act 2002 (accreditation and training) F128;

(b)persons acting on behalf of the Scottish Ministers in their capacity as an enforcement authority under that Act; and

(c)constables or equivalent officers of any law enforcement authority.

(10) In determining what is appropriate with regard to the size and nature of its business, a relevant person—

(a)must take into account its risk assessment under regulation 18(1); and

(b)may take into account any guidance which has been—

(i)issued by the FCA; or

(ii)issued by any other supervisory authority or appropriate body and approved by the Treasury.

F1282002 c. 29. Section 3 was amended by paragraph 111 of Schedule 8 to the Crime and Courts Act 2013 (c.22), and by paragraph 120 of Schedule 8 and paragraph 1 of Schedule 14 to the Serious Crime Act 2007 (c.27).

Central contact points: electronic money issuers and payment service providersU.K.

F12922.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirement on authorised person to inform the FCAU.K.

23.—(1) An authorised person whose supervisory authority is the FCA must, before acting as a money service business or a trust or company service provider or within 28 days of so doing, inform the FCA that it intends, or has begun, to act as such.

(2) Paragraph (1) does not apply to an authorised person which—

(a)immediately before the day on which these Regulations come into force (“the relevant date”) was acting as a money service business or a trust or company service provider and continues to act as such after that date; and

(b)informs the FCA that it is acting as such within 30 days of the relevant date.

(3) Where an authorised person whose supervisory authority is the FCA ceases to act as a money service business or a trust or company service provider, it must within 28 days inform the FCA.

(4) Any requirement imposed by this regulation is to be treated as if it were a requirement imposed by or under FSMA.

(5) Any information to be provided to the FCA under this regulation must be in such form or verified in such manner as it may specify.

TrainingU.K.

24.—(1) A relevant person must—

(a)take appropriate measures to ensure that its relevant employees [F130, and any agents it uses for the purposes of its business whose work is of a kind mentioned in paragraph (2),] are—

(i)made aware of the law relating to money laundering and terrorist financing, and to the requirements of data protection, which are relevant to the implementation of these Regulations; and

(ii)regularly given training in how to recognise and deal with transactions and other activities or situations which may be related to money laundering or terrorist financing;

(b)maintain a record in writing of the measures taken under sub-paragraph (a), and in particular, of the training given to its relevant employees [F131and to any agents it uses for the purposes of its business whose work is of a kind mentioned in paragraph (2)].

(2) For the purposes of paragraph (1), a relevant employee is an employee whose work is—

(a)relevant to the relevant person's compliance with any requirement in these Regulations, or

(b)otherwise capable of contributing to the—

(i)identification or mitigation of the risk of money laundering and terrorist financing to which the relevant person's business is subject; or

(ii)prevention or detection of money laundering and terrorist financing in relation to the relevant person's business.

(3) In determining what measures are appropriate under paragraph (1), a relevant person—

(a)must take account of—

(i)the nature of its business;

(ii)its size;

(iii)the nature and extent of the risks of money laundering and terrorist financing to which its business is subject; and

(b)may take into account any guidance which has been—

(i)issued by the FCA; or

(ii)issued by any other supervisory authority or appropriate body and approved by the Treasury.

Supervisory actionU.K.

25.—(1) The supervisory authority must determine whether the additional measures taken under regulation 20(4) by a relevant parent undertaking which is an authorised person [F132, a qualifying parent undertaking (as defined by section 192B of FSMA) or a non-authorised parent undertaking (as defined by section 143B of FSMA)] are sufficient to handle the risk of money laundering and terrorist financing effectively.

(2) If the supervisory authority does not consider the measures referred to in paragraph (1) to be sufficient, it must consider whether to direct the relevant parent undertaking—

(a)not to enter into a business relationship with a specified person;

(b)not to undertake transactions of a specified description with a specified person;

(c)to terminate an existing business relationship with a specified person;

(d)to cease any operations in the third country.

(e)to ensure that its subsidiary undertaking—

(i)does not enter into a business relationship with a specified person;

(ii)terminates an existing business relationship with a specified person; or

(iii)does not undertake transactions of a specified description with a specified person, or ceases any operations in the third country.

(3) A direction issued under paragraph (2) takes effect—

(a)immediately, if the notice given under paragraph (6) states that that is the case;

(b)on such date as may be specified in the notice; or

(c)if no such date is specified in the notice, when the matter to which the notice relates is no longer open to review.

(4) For the purposes of paragraph (3), a matter to which a notice relates is still open to review if—

(a)the period during which any person may refer the matter to the appropriate tribunal is still running;

(b)the matter has been referred to the appropriate tribunal but has not been dealt with;

(c)the matter has been referred to the appropriate tribunal and dealt with but the period during which an appeal may be brought against the appropriate tribunal's decision is still running; or

(d)such an appeal has been brought but has not been determined.

(5) Where the FCA proposes to issue a direction under paragraph (2) to a PRA-authorised person or to a person who has a qualifying relationship with a PRA-authorised person, it must consult the PRA.

(6) If the supervisory authority issues a direction under paragraph (2) it must give the relevant parent undertaking (“A”) a notice in writing.

(7) The notice must—

(a)give details of the direction;

(b)state the supervisory authority's reasons for issuing the direction;

(c)inform A that A may make representations to the supervisory authority within such period as may be specified in the notice (whether or not A has referred the matter to the appropriate tribunal);

(d)inform A of when the direction takes effect; and

(e)inform A of A's right to refer the matter to the appropriate tribunal.

(8) The supervisory authority may extend the period allowed under the notice for making representations.

(9) If, having considered any representations made by A, the supervisory authority decides—

(a)to issue the direction, or

(b)if the direction has been issued, not to rescind the direction,

it must give A notice in writing.

(10) If, having considered any representations made by A, the supervisory authority decides—

(a)not to issue the direction,

(b)to issue a different direction, or

(c)to rescind a direction which has effect,

it must give A notice in writing.

(11) A notice under paragraph (9) must inform A of A's right to refer the matter to the appropriate tribunal.

(12) A notice under paragraph (10)(b) must comply with paragraph (7).

(13) If a notice informs A of A's right to refer a matter to the appropriate tribunal, it must give an indication of the procedure on such a reference.

[F133(13A) The supervisory authority may, if it considers it proportionate to do so, publish such information about a direction given under paragraph (2) as the authority considers appropriate.

(13B) Where the supervisory authority publishes such information and the supervisory authority decides to rescind the direction to which the notice relates, the supervisory authority must, without delay, publish that fact in the same manner as that in which the information was published under paragraph (13A).

(13C) Where the supervisory authority publishes information under paragraph (13A) and the person to whom the notice is given refers the matter to the Upper Tribunal, the supervisory authority must, without delay, publish information about the status of the appeal and its outcome in the same manner as that in which the information was published under paragraph (13A).]

(14) For the purpose of this regulation—

(a)appropriate tribunal” means—

(i)the Upper Tribunal, in the case of a direction issued by the FCA;

(ii)the First-tier or Upper Tribunal, as provided for in regulation 99, in the case of a direction issued by the Commissioners;

(b)specified” means specified in the direction.

CHAPTER 3U.K.Ownership and Management Restrictions

Prohibitions and approvalsU.K.

26.—(1) No person may be the beneficial owner, officer or manager of a firm within paragraph (2) (“a relevant firm”), or a sole practitioner within paragraph (2) (“a relevant sole practitioner”), unless that person has been approved as a beneficial owner, officer or manager of the firm or as a sole practitioner by the supervisory authority of the firm or sole practitioner.

(2) The firms and sole practitioners within this paragraph are—

(a)auditors, insolvency practitioners, external accountants and tax advisors;

(b)independent legal professionals;

(c)estate agents [F134and letting agents];

(d)high value dealers;

[F135(e)art market participants.]

(3) A person does not breach the prohibition in paragraph (1) if that person has before 26th June 2018 applied to the supervisory authority for approval under paragraph (6) and that application has not yet been determined.

[F136(3A) A person does not breach the prohibition in paragraph (1) if—

(a)that person became a relevant firm or relevant sole practitioner on 10th January 2020 by virtue of an amendment to these Regulations by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019;

(b)that person has before 10th January 2021 applied to the supervisory authority for approval under paragraph (6); and

(c)that application has not yet been determined.]

(4) A relevant firm must take reasonable care to ensure that no-one is appointed, or continues to act, as an officer or manager of the firm unless—

(a)that person has been approved by the supervisory authority, and the supervisory authority's approval of that person has not ceased to be valid; or

(b)that person has applied for approval of the supervisory authority under paragraph (6) and the application has not yet been determined.

(5) A relevant sole practitioner must not act, or continue to act, as a sole practitioner unless—

(a)that person has been approved by the supervisory authority, and the supervisory authority's approval of that person has not ceased to be valid; or

(b)that person has applied for approval of the supervisory authority under paragraph (6) and the application has not yet been determined.

(6) An application for the approval of the supervisory authority under paragraph (1) may be made by or on behalf of the person concerned.

(7) The application must—

(a)be made in such manner as the supervisory authority may direct;

[F137(b)contain, or be accompanied by—

(i)sufficient information to enable the supervisory authority, if it is a self-regulatory organisation, to determine whether the person concerned has been convicted of a relevant offence; and

(ii)such other information as the supervisory authority may reasonably require.]

(8) The supervisory authority—

(a)must grant an application for approval under paragraph (6) unless the applicant has been convicted of a relevant offence;

(b)may grant an application so as to give approval only for a limited period.

(9) An approval given by a supervisory authority under paragraph (8)—

(a)is not valid if the person approved under paragraph (1) (the “approved person”) has been convicted of a relevant offence;

(b)ceases to be valid if the approved person is subsequently convicted of a relevant offence.

(10) If an approved person (“P”) is convicted of a relevant offence—

(a)P must inform the supervisory authority which approved P of the conviction within 30 days of the day on which P was convicted;

(b)the relevant firm for which P was approved must inform its supervisory authority of the conviction within 30 days of the date on which the firm became aware of P's conviction.

(11) If the beneficial owner of a relevant firm is convicted of a relevant offence, the High Court (or in Scotland the Court of Session) may, on the application of the supervisory authority, order the sale of the beneficial owner's interest in that firm.

(12) A person who, in breach of the prohibition in paragraph (1)—

(a)acts as a manager or officer of a relevant firm or as a relevant sole practitioner; or

(b)is knowingly a beneficial owner of a relevant firm,

is guilty of a criminal offence.

(13) A person who is guilty of a criminal offence under paragraph (12) is liable—

(a)on summary conviction—

(i)in England and Wales, to imprisonment for a term not exceeding three months, to a fine or to both;

(ii)in Scotland or Northern Ireland, to imprisonment for a term not exceeding three months, to a fine not exceeding the statutory maximum or to both;

(b)on conviction on indictment, to imprisonment for a term not exceeding two years, to a fine or to both.

(14) The offences listed in Schedule 3 are relevant offences for the purposes of this regulation.

PART 3 U.K.Customer Due Diligence

CHAPTER 1U.K.Customer due diligence: general

Customer due diligenceU.K.

27.—(1) A relevant person must apply customer due diligence measures if the person—

(a)establishes a business relationship;

(b)carries out an occasional transaction that amounts to a transfer of funds within the meaning of Article 3.9 of the funds transfer regulation exceeding 1,000 euros;

(c)suspects money laundering or terrorist financing; or

(d)doubts the veracity or adequacy of documents or information previously obtained for the purposes of identification or verification.

(2) A relevant person who is not [F138a letting agent,] a high value dealer, [F139an art market participant, a cryptoasset exchange provider of the kind referred to in paragraph (7D)] or a casino must also apply customer due diligence measures if the person carries out an occasional transaction that amounts to 15,000 euros or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.

(3) A high value dealer must also apply customer due diligence measures if that dealer carries out an occasional transaction in cash that amounts to 10,000 euros or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.

(4) A transaction does not cease to be a “transaction in cash” for the purposes of paragraph (3) if cash is paid by or on behalf of a party to the transaction—

(a)to a person other than the other party to the transaction for the benefit of the other party, or

(b)into a bank account for the benefit of the other party to the transaction.

(5) A casino must also apply customer due diligence measures in relation to any transaction within paragraph (6) that amounts to 2,000 euros or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.

(6) A transaction is within this paragraph if it consists of—

(a)the wagering of a stake, including—

(i)the purchase from, or exchange with, the casino of tokens for use in gambling at the casino;

(ii)payment for use of gaming machines (within the meaning of section 235 of the Gambling Act 2005 F140); and

(iii)the deposit of funds required to take part in remote gambling; or

(b)the collection of winnings, including the withdrawal of funds deposited to take part in remote gambling (within the meaning of section 4 of the Gambling Act 2005) or winnings arising from the staking of such funds.

(7) In determining whether a transaction amounts to 2,000 euros or more for the purposes of paragraph (5), no account is to be taken of winnings from a previous transaction which had not been collected from the casino, gaming machine or remote gambling, but are being re-used in the transaction in question.

[F141(7A) A letting agent must also apply customer due diligence measures in relation to any transaction which consists of the conclusion of an agreement for the letting of land (within the meaning given in regulation 13(7))—

(i)for a term of a month or more, and

(ii)at a rent which during at least part of the term is, or is equivalent to, a monthly rent of 10,000 euros or more.

(7B) The letting agent must apply customer due diligence measures under paragraph (7A) in relation to both the person by whom the land is being let, and the person who is renting the land.

(7C) An art market participant must also apply customer due diligence measures—

(a)in relation to any trade in a work of art (within the meaning given in regulation 14), when the firm or sole practitioner carries out, or acts in respect of, any such transaction, or series of linked transactions, whose value amounts to 10,000 euros or more;

(b)in relation to the storage of a work of art (within the meaning given in regulation 14), when it is the operator of a freeport and the value of the works of art so stored for a person, or series of linked persons, amounts to 10,000 euros or more.

(7D) A cryptoasset exchange provider of the kind who operates a machine which utilises automated processes to exchange cryptoassets for money, or money for cryptoassets, must also apply customer due diligence measures in relation to any such transaction carried out using that machine (and for the purposes of this paragraph “money” and “cryptoasset” have the same meanings as they have in regulation 14A(1)).]

(8) A relevant person must also apply customer due diligence measures—

[F142(za)when the relevant person has any legal duty in the course of the calendar year to contact an existing customer for the purpose of reviewing any information which—

(i)is relevant to the relevant person’s risk assessment for that customer, and

(ii)relates to the beneficial ownership of the customer, including information which enables the relevant person to understand the ownership or control structure of a legal person, trust, foundation or similar arrangement who is the beneficial owner of the customer;

(zb)when the relevant person has to contact an existing customer in order to fulfil any duty under the International Tax Compliance Regulations 2015 F143;]

(a)at other appropriate times to existing customers on a risk based approach;

(b)when the relevant person becomes aware that the circumstances of an existing customer relevant to its risk assessment for that customer have changed.

(9) For the purposes of paragraph (8), in determining when it is appropriate to take customer due diligence measures in relation to existing customers, a relevant person must take into account, among other things—

(a)any indication that the identity of the customer, or of the customer's beneficial owner, has changed;

(b)any transactions which are not reasonably consistent with the relevant person's knowledge of the customer;

(c)any change in the purpose or intended nature of the relevant person's relationship with the customer;

(d)any other matter which might affect the relevant person's assessment of the money laundering or terrorist financing risk in relation to the customer.

Customer due diligence measuresU.K.

28.—(1) This regulation applies when a relevant person is required by regulation 27 to apply customer due diligence measures.

(2) The relevant person must—

(a)identify the customer unless the identity of that customer is known to, and has been verified by, the relevant person;

(b)verify the customer's identity unless the customer's identity has already been verified by the relevant person; and

(c)assess, and where appropriate obtain information on, the purpose and intended nature of the business relationship or occasional transaction.

(3) Where the customer is a body corporate—

(a)the relevant person must obtain and verify—

(i)the name of the body corporate;

(ii)its company number or other registration number;

(iii)the address of its registered office, and if different, its principal place of business;

(b)subject to paragraph (5), the relevant person must take reasonable measures to determine and verify—

(i)the law to which the body corporate is subject, and its constitution (whether set out in its articles of association or other governing documents);

(ii)the full names of the board of directors (or if there is no board, the members of the equivalent management body) and the senior persons responsible for the operations of the body corporate.

[F144(3A) Where the customer is a legal person, trust, company, foundation or similar legal arrangement the relevant person must take reasonable measures to understand the ownership and control structure of that legal person, trust, company, foundation or similar legal arrangement.]

(4) Subject to paragraph (5), where the customer is beneficially owned by another person, the relevant person must—

(a)identify the beneficial owner;

(b)take reasonable measures to verify the identity of the beneficial owner so that the relevant person is satisfied that it knows who the beneficial owner is; and

(c)if the beneficial owner is a legal person, trust, company, foundation or similar legal arrangement take reasonable measures to understand the ownership and control structure of that legal person, trust, company, foundation or similar legal arrangement.

(5) Paragraphs (3)(b)[F145, (3A)] and (4) do not apply where the customer is a company which is listed on a regulated market.

(6) If the customer is a body corporate, and paragraph (7) applies, the relevant person may treat the senior person in that body corporate responsible for managing it as its beneficial owner.

(7) This paragraph applies if (and only if) the relevant person has exhausted all possible means of identifying the beneficial owner of the body corporate and—

(a)has not succeeded in doing so, or

(b)is not satisfied that the individual identified is in fact the beneficial owner.

[F146(8) If paragraph (7) applies, the relevant person must—

(a)keep records in writing of all the actions it has taken to identify the beneficial owner of the body corporate;

(b)take reasonable measures to verify the identity of the senior person in the body corporate responsible for managing it, and keep records in writing of—

(i)all the actions the relevant person has taken in doing so, and

(ii)any difficulties the relevant person has encountered in doing so.]

(9) Relevant persons do not satisfy their requirements under paragraph (4) by relying solely on the information—

(a)contained in—

(i)the register of people with significant control kept by a company under section 790M of the Companies Act 2006 (duty to keep register) F143;

(ii)the register of people with significant control kept by a limited liability partnership under section 790M of the Companies Act 2006 as modified by regulation 31E of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 F147; or

(iii)the register of people with significant control kept by a [F148UK Societas] (within the meaning of the Council Regulation 2157/2001/EC of 8 October 2001 on the Statute for a European Company F149...) under section 790M of the Companies Act 2006 as modified by regulation 5 of the European Public Limited Liability Company (Register of People with Significant Control) Regulations 2016 F150;

(b)referred to in sub-paragraph (a) and delivered to the registrar of companies (within the meaning of section 1060(3) of the Companies Act 2006 (the registrar)) under any enactment; or

(c)contained in required particulars in relation to eligible Scottish partnerships delivered to the registrar of companies under regulation 19 of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017 F151.

(10) Where a person (“A”) purports to act on behalf of the customer, the relevant person must—

(a)verify that A is authorised to act on the customer's behalf;

(b)identify A; and

(c)verify A's identity on the basis of documents or information in either case obtained from a reliable source which is independent of both A and the customer.

(11) The relevant person must conduct ongoing monitoring of a business relationship, including—

(a)scrutiny of transactions undertaken throughout the course of the relationship (including, where necessary, the source of funds) to ensure that the transactions are consistent with the relevant person's knowledge of the customer, the customer's business and risk profile;

(b)undertaking reviews of existing records and keeping the documents or information obtained for the purpose of applying customer due diligence measures up-to-date.

(12) The ways in which a relevant person complies with the requirement to take customer due diligence measures, and the extent of the measures taken—

(a)must reflect—

(i)the risk assessment carried out by the relevant person under regulation 18(1);

(ii)its assessment of the level of risk arising in any particular case;

(b)may differ from case to case.

(13) In assessing the level of risk in a particular case, the relevant person must take account of factors including, among other things—

(a)the purpose of an account, transaction or business relationship;

(b)the level of assets to be deposited by a customer or the size of the transactions undertaken by the customer;

(c)the regularity and duration of the business relationship.

(14) If paragraph (15) applies, a relevant person is not required to continue to apply customer due diligence measures under paragraph (2) or (10) in respect of a customer.

(15) This paragraph applies if all the following conditions are met—

(a)a relevant person has taken customer due diligence measures in relation to a customer;

(b)the relevant person makes a disclosure required by—

(i)Part 3 of the Terrorism Act 2000 F152, or

(ii)Part 7 of the Proceeds of Crime Act 2002 F153; and

(c)continuing to apply customer due diligence measures in relation to that customer would result in the commission of an offence by the relevant person under—

(i)section 21D of the Terrorism Act 2000 (tipping off: regulated sector) F154; or

(ii)section 333A of the Proceeds of Crime Act 2002 (tipping off: regulated sector) F155.

(16) The relevant person must be able to demonstrate to its supervisory authority that the extent of the measures it has taken to satisfy its requirements under this regulation are appropriate in view of the risks of money laundering and terrorist financing, including risks—

(a)identified by the risk assessment carried out by the relevant person under regulation 18(1);

(b)identified by its supervisory authority and in information made available to the relevant person under regulations 17(9) and 47.

(17) Paragraph (16) does not apply to the National Savings Bank or the Director of Savings.

(18) For the purposes of this regulation—

(a)except in paragraph (10), “verify” means verify on the basis of documents or information in either case obtained from a reliable source which is independent of the person whose identity is being verified;

(b)documents issued or made available by an official body are to be regarded as being independent of a person even if they are provided or made available to the relevant person by or on behalf of that person.

[F156(19) For the purposes of this regulation, information may be regarded as obtained from a reliable source which is independent of the person whose identity is being verified where—

(a)it is obtained by means of an electronic identification process, including by using electronic identification means or by using a trust service (within the meanings of those terms in Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23rd July 2014 on electronic identification and trust services for electronic transactions in the internal market F157); and

(b)that process is secure from fraud and misuse and capable of providing [F158assurance that the person claiming a particular identity is in fact the person with that identity, to a degree that is necessary for effectively managing and mitigating any risks of money laundering and terrorist financing].]

F147S.I. 2009/1804. Regulation 31E was inserted by S.I. 2016/340.

F154Section 21D was inserted by S.I. 2007/3398.

F155Section 333A was inserted by S.I. 2007/3398.

F157OJ L 257, 28.08.2014, p.73.

Additional customer due diligence measures: credit institutions and financial institutionsU.K.

29.—(1) This regulation applies in addition to regulation 28 where a relevant person is a credit institution or a financial institution.

(2) Paragraphs (3) to (5) apply if the relevant person is providing a customer with a contract of long-term insurance (“the insurance policy”).

(3) As soon as the beneficiaries of the insurance policy are identified or designated, the relevant person must—

(a)if the beneficiary is a named person or legal arrangement, take the full name of the person or arrangement; or

(b)if the beneficiaries are designated by specified characteristics, as a class or in any other way, obtain sufficient information about the beneficiaries to satisfy itself that it will be able to establish the identity of the beneficiary before any payment is made under the insurance policy.

(4) The relevant person must verify the identity of the beneficiaries (on the basis of documents or information in either case obtained from a reliable source which is independent of the customer and the beneficiaries, and regulation 28(18)(b) applies for the purpose of determining whether a source satisfies this requirement) before any payment is made under the insurance policy.

(5) When the relevant person becomes aware that all or part of the rights under the insurance policy are being, or have been, assigned to an individual, body corporate, trust or other legal arrangement which is receiving the value or part of the value of the insurance policy for its own benefit ( “ the new beneficiary ”), the relevant person must identify the new beneficiary as soon as possible after becoming aware of the assignment, and in any case before a payment is made under the policy.

(6) The relevant person must not set up [F159an anonymous account, an anonymous passbook or an anonymous safe-deposit box] for any new or existing customer.

(7) The relevant person must apply customer due diligence measures to all anonymous accounts and passbooks in existence on the date on which these Regulations come into force, and in any event before such accounts or passbooks are used in any way.

[F160(7A) The relevant person must apply customer due diligence measures to all anonymous safe-deposit boxes in existence on 10th January 2019, and in any event before such safe-deposit boxes are used in any way.]

(8) A relevant person which—

(a)is an open-ended investment company within the meaning of regulation 2(1) of the Open-Ended Investment Companies Regulations 2001 F161; and

(b)is authorised on or after the date on which these Regulations come into force,

may not issue shares evidenced by a share certificate (or any other documentary evidence) indicating that the holder of the certificate or document is entitled to the shares specified in it.

(9) Paragraph (8) does not apply to an open-ended investment company if—

(a)an application for an authorisation order under regulation 12 of the Open-ended Investment Companies Regulations 2001 was made in relation to that open-ended investment company before the date on which these Regulations come into force; and

(b)that application was not determined until a date on or after the date on which these Regulations come into force.

Timing of verificationU.K.

30.—(1) This regulation applies when a relevant person is required to take any measures under regulation 27, 28 or 29.

(2) Subject to paragraph (3) or (4), a relevant person must comply with the requirement to verify the identity of the customer, any person purporting to act on behalf of the customer and any beneficial owner of the customer before the establishment of a business relationship or the carrying out of the transaction.

(3) Provided that the verification is completed as soon as practicable after contact is first established, the verification of the customer, any person purporting to act on behalf of the customer and the customer's beneficial owner, may be completed during the establishment of a business relationship if—

(a)this is necessary not to interrupt the normal conduct of business; and

(b)there is little risk of money laundering and terrorist financing.

(4) The verification by a credit institution or a financial institution of the identity of a customer opening an account, any person purporting to act on behalf of the customer and any beneficial owner of the customer, may take place after the account has been opened provided that there are adequate safeguards in place to ensure that no transactions are carried out by or on behalf of the customer before verification has been completed.

(5) For the purposes of paragraph (4) “account” includes an account which permits transactions in transferable securities.

(6) Paragraph (7) applies if—

(a)the relevant person is required to apply customer due diligence measures in the case of a trust, a legal entity (other than a body corporate) or a legal arrangement (other than a trust); and

(b)the beneficiaries of that trust, entity or arrangement are designated as a class, or by reference to particular characteristics.

(7) If this paragraph applies, the relevant person must establish and verify the identity of any beneficiary before—

(a)any payment is made to the beneficiary; or

(b)the beneficiary exercises its vested rights in the trust, legal entity or legal arrangement.

[F162Requirement to report discrepancies in registersU.K.

30A.(1) Before establishing a business relationship with—

(a)a company which is subject to the requirements of Part 21A of the Companies Act 2006 (information about people with significant control);

(b)an unregistered company which is subject to the requirements of the Unregistered Companies Regulations 2009;

(c)a limited liability partnership which is subject to the requirements of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009;

(d)an eligible Scottish partnership which is subject to the requirements of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017, or

(e)a trust which is subject to registration under Part 5 of these Regulations,

a relevant person must collect proof of registration or an excerpt of the register from the company, the unregistered company, the limited liability partnership or the trust (as the case may be) or from the registrar (in the case of an eligible Scottish partnership).

(2) The relevant person must report to the person mentioned in paragraph (3) any discrepancy the relevant person finds between information relating to the beneficial ownership of the customer—

(a)which the relevant person collects under paragraph (1), and

(b)which otherwise becomes available to the relevant person in the course of carrying out its duties under these Regulations when establishing a business relationship with the customer.

(3) The discrepancy must be reported—

(a)if it relates to a company, an unregistered company, a limited liability partnership or an eligible Scottish partnership, to the registrar; or

(b)if it relates to a trust, to the Commissioners.

(4) The relevant person is not required under paragraph (2) to report information which that person would be entitled to refuse to provide on grounds of legal professional privilege in the High Court (or in Scotland, on the ground of confidentiality of communications in the Court of Session).

(5) The person to whom the discrepancy is reported must take such action as that person considers appropriate to investigate and, if necessary, resolve the discrepancy in a timely manner.

(6) A discrepancy which is reported to the registrar under paragraph (3) is material excluded from public inspection for the purposes of section 1087 of the Companies Act 2006 (material not available for public inspection), including for the purposes of that section as applied—

(a)to unregistered companies by paragraph 20 of Schedule 1 to the Unregistered Companies Regulations 2009;

(b)to limited liability partnerships by regulation 66 of the Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009; and

(c)to eligible Scottish partnerships by regulation 61 of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017.

(7) A reference to the registrar in this regulation is to the registrar of companies within the meaning of section 1060(3) of the Companies Act 2006.]

Requirement to cease transactions etcU.K.

31.—(1) Where, in relation to any customer, a relevant person is unable to apply customer due diligence measures as required by regulation 28, that person—

(a)must not carry out any transaction through a bank account with the customer or on behalf of the customer;

(b)must not establish a business relationship or carry out a transaction with the customer otherwise than through a bank account;

(c)must terminate any existing business relationship with the customer;

(d)must consider whether the relevant person is required to make a disclosure (or to make further disclosure) by—

(i)Part 3 of the Terrorism Act 2000 F163; or

(ii)Part 7 of the Proceeds of Crime Act 2002 F164.

(2) Paragraph (1)(a) does not prevent money deposited in an account being repaid to the person who deposited it, provided that, in any case where a disclosure is required by the legislation referred in paragraph (1)(d), the relevant person has—

(a)consent (within the meaning of section 21ZA of the Terrorism Act 2000 (arrangements with prior consent)) F165 to the transaction, or

(b)the appropriate consent (within the meaning of section 335 of the Proceeds of Crime Act 2002 (appropriate consent)) to the transaction.

(3) Paragraph (1) does not apply where an independent legal professional or other professional adviser is in the course of ascertaining the legal position for a client or performing the task of defending or representing that client in, or concerning, legal proceedings, including giving advice on the institution or avoidance of proceedings.

(4) In paragraph (3), “other professional adviser” means an auditor, external accountant or tax adviser who is a member of a professional body which is established for any such persons and which makes provision for—

(a)testing the competence of those seeking admission to membership of such a body as a condition for such admission; and

(b)imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

(5) Paragraph (1)(a) to (c) does not apply where an insolvency practitioner has been appointed by the court as administrator or liquidator of a company, provided that—

(a)the insolvency practitioner has taken all reasonable steps to satisfy the requirements set out in regulation 28(2) and (10), and

(b)the resignation of the insolvency practitioner would be prejudicial to the interests of the creditors of the company.

F165Section 21ZA was inserted by S.I. 2007/3398.

Exception for trustees of debt issuesU.K.

32.—(1) A relevant person—

(a)who is appointed by the issuer of instruments or securities specified in paragraph (2) as trustee of an issue of such instruments or securities; or

(b)whose customer is a trustee of an issue of such instruments or securities,

is not required to apply the customer due diligence measure referred to in regulation 28(3) and (4) in respect of the holders of such instruments or securities.

(2) The specified instruments and securities are—

(a)instruments which fall within article 77 or 77A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 F166; and

(b)securities which fall within article 78 of that Order F167.

F166S.I. 2001/544. Article 77 was amended by S.I. 2010/86, 2011/133. Article 77A was inserted by S.I. 2010/86 and amended by S.I. 2011/133.

F167Article 78 was amended by S.I. 2010/86.

CHAPTER 2U.K.Enhanced customer due diligence

Obligation to apply enhanced customer due diligenceU.K.

33.—(1) A relevant person must apply enhanced customer due diligence measures and enhanced ongoing monitoring, in addition to the customer due diligence measures required under regulation 28 and, if applicable, regulation 29, to manage and mitigate the risks arising—

(a)in any case identified as one where there is a high risk of money laundering or terrorist financing—

(i)by the relevant person under regulation 18(1), or

(ii)in information made available to the relevant person under regulations 17(9) and 47;

(b)in any business relationship F168... with a person established in a high-risk third country [F169or in relation to any relevant transaction where either of the parties to the transaction is established in a high-risk third country];

(c)in relation to correspondent relationships with a credit institution or a financial institution (in accordance with regulation 34);

(d)if a relevant person has determined that a customer or potential customer is a PEP, or a family member or known close associate of a PEP (in accordance with regulation 35);

(e)in any case where the relevant person discovers that a customer has provided false or stolen identification documentation or information and the relevant person proposes to continue to deal with that customer;

[F170(f)in any case where—

(i)a transaction is complex or unusually large,

(ii)there is an unusual pattern of transactions, or

(iii)the transaction or transactions have no apparent economic or legal purpose, and]

(g)in any other case which by its nature can present a higher risk of money laundering or terrorist financing.

(2) Paragraph (1)(b) does not apply when the customer is a branch or majority owned subsidiary undertaking of an entity which is established in [F171a third country] if all the following conditions are satisfied—

[F172(a)the entity is—

(i)subject to requirements in national legislation having an equivalent effect to those laid down in the fourth money laundering directive on an obliged entity (within the meaning of that directive); and

(ii)supervised for compliance with those requirements in a manner equivalent to section 2 of Chapter VI of the fourth money laundering directive;]

(b)the branch or subsidiary complies fully with procedures and policies established for the group under [F173requirements equivalent to those laid down in] Article 45 of the fourth money laundering directive; and

(c)the relevant person, applying a risk-based approach, does not consider that it is necessary to apply enhanced customer due diligence measures.

[F174(3) For the purposes of paragraph (1)(b)—

(a)[F175a “high-risk third country” means a country which is specified in Schedule 3ZA;]

(b)a “relevant transaction” means a transaction in relation to which the relevant person is required to apply customer due diligence measures under regulation 27;

(c)being “established in” a country means—

(i)in the case of a legal person, being incorporated in or having its principal place of business in that country, or, in the case of a financial institution or a credit institution, having its principal regulatory authority in that country; and

(ii)in the case of an individual, being resident in that country, but not merely having been born in that country.]

[F176(3A) The enhanced due diligence measures taken by a relevant person for the purpose of paragraph (1)(b) must include—

(a)obtaining additional information on the customer and on the customer’s beneficial owner;

(b)obtaining additional information on the intended nature of the business relationship;

(c)obtaining information on the source of funds and source of wealth of the customer and of the customer’s beneficial owner;

(d)obtaining information on the reasons for the transactions;

(e)obtaining the approval of senior management for establishing or continuing the business relationship;

(f)conducting enhanced monitoring of the business relationship by increasing the number and timing of controls applied, and selecting patterns of transactions that need further examination.]

(4) The enhanced customer due diligence measures taken by a relevant person for the purpose of paragraph (1)(f) must include—

(a)as far as reasonably possible, examining the background and purpose of the transaction, and

(b)increasing the degree and nature of monitoring of the business relationship in which the transaction is made to determine whether that transaction or that relationship appear to be suspicious.

[F177(4A) Where a relevant person provides a life insurance policy, the relevant person must consider the nature and identity of the beneficiary of the policy when assessing whether there is a high risk of money laundering or terrorist financing, and the extent of the measures which should be taken to manage and mitigate that risk.

(4B) Where the beneficiary of a life insurance policy provided by a relevant person—

(a)is a legal person or a legal arrangement, and

(b)presents a high risk of money laundering or terrorist financing,

the relevant person must take reasonable measures to identify and verify the identity of the beneficial owner of that beneficiary before any payment is made under the policy.]

(5) Depending on the requirements of the case, the enhanced customer due diligence measures required under paragraph (1) may also include, among other things—

(a)seeking additional independent, reliable sources to verify information provided or made available to the relevant person;

(b)taking additional measures to understand better the background, ownership and financial situation of the customer, and other parties to the transaction;

(c)taking further steps to be satisfied that the transaction is consistent with the purpose and intended nature of the business relationship;

(d)increasing the monitoring of the business relationship, including greater scrutiny of transactions.

(6) When assessing whether there is a high risk of money laundering or terrorist financing in a particular situation, and the extent of the measures which should be taken to manage and mitigate that risk, relevant persons must take account of risk factors including, among other things—

(a)customer risk factors, including whether—

(i)the business relationship is conducted in unusual circumstances;

(ii)the customer is resident in a geographical area of high risk (see sub-paragraph (c));

(iii)the customer is a legal person or legal arrangement that is a vehicle for holding personal assets;

(iv)the customer is a company that has nominee shareholders or shares in bearer form;

(v)the customer is a business that is cash intensive;

(vi)the corporate structure of the customer is unusual or excessively complex given the nature of the company's business;

[F178(vii)the customer is the beneficiary of a life insurance policy;

(viii)the customer is a third country national who is applying for residence rights in or citizenship of [F179a state] in exchange for transfers of capital, purchase of a property, government bonds or investment in corporate entities in [F180that state];]

(b)product, service, transaction or delivery channel risk factors, including whether—

(i)the product involves private banking;

(ii)the product or transaction is one which might favour anonymity;

(iii)the situation involves non-face-to-face business relationships or transactions, without certain safeguards, such as [F181an electronic identification process which meets the conditions set out in regulation 28(19)];

(iv)payments will be received from unknown or unassociated third parties;

(v)new products and new business practices are involved, including new delivery mechanisms, and the use of new or developing technologies for both new and pre-existing products;

(vi)the service involves the provision of nominee directors, nominee shareholders or shadow directors, or the formation of companies in a third country;

[F182(vii)there is a transaction related to oil, arms, precious metals, tobacco products, cultural artefacts, ivory or other items related to protected species, or other items of archaeological, historical, cultural or religious significance or of rare scientific value;]

(c)geographical risk factors, including—

(i)countries identified by credible sources, such as mutual evaluations, detailed assessment reports or published follow-up reports, as not having effective systems to counter money laundering or terrorist financing;

(ii)countries identified by credible sources as having significant levels of corruption or other criminal activity, such as terrorism (within the meaning of section 1 of the Terrorism Act 2000 F183), money laundering, and the production and supply of illicit drugs;

(iii)countries subject to sanctions, embargos or similar measures issued by, for example, the European Union or the United Nations;

(iv)countries providing funding or support for terrorism;

(v)countries that have organisations operating within their territory which have been designated—

(aa)by the government of the United Kingdom as proscribed organisations under Schedule 2 to the Terrorism Act 2000 F184, or

(bb)by other countries, international organisations or the European Union as terrorist organisations;

(vi)countries identified by credible sources, such as evaluations, detailed assessment reports or published follow-up reports published by the Financial Action Task Force, the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development or other international bodies or non-governmental organisations as not implementing requirements to counter money laundering and terrorist financing that are consistent with the recommendations published by the Financial Action Task Force in February 2012 and updated in [F185June 2019].

(7) In making the assessment referred to in paragraph (6), relevant persons must bear in mind that the presence of one or more risk factors may not always indicate that there is a high risk of money laundering or terrorist financing in a particular situation.

F186(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F183 2006 c. 46; Part 21A was inserted by Schedule 3 to the Small Business, Enterprise and Employment Act 2015 (c.26).

Enhanced customer due diligence: credit institutions, financial institutions and correspondent relationshipsU.K.

34.—(1) A credit institution or financial institution (the “correspondent”) which has or proposes to have a correspondent relationship [F187involving the execution of payments] with another such institution (the “respondent”) from a third country must, in addition to the measures required by regulation 33—

(a)gather sufficient information about the respondent to understand fully the nature of its business;

(b)determine from publicly-available information from credible sources the reputation of the respondent and the quality of the supervision to which the respondent is subject;

(c)assess the respondent's controls to counter money laundering and terrorist financing;

(d)obtain approval from senior management before establishing a new correspondent relationship;

(e)document the responsibilities of the respondent and correspondent in the correspondent relationship; and

(f)be satisfied that, in respect of those of the respondent's customers who have direct access to accounts with the correspondent, the respondent—

(i)has verified the identity of, and conducts ongoing customer due diligence measures in relation to, such customers; and

(ii)is able to provide to the correspondent, upon request, the documents or information obtained when applying such customer due diligence measures.

(2) Credit institutions and financial institutions must not enter into, or continue, a correspondent relationship with a shell bank.

(3) Credit institutions and financial institutions must take appropriate enhanced measures to ensure that they do not enter into, or continue, a correspondent relationship with a credit institution or financial institution which is known to allow its accounts to be used by a shell bank.

(4) For the purposes of this regulation—

(a)correspondent relationship” means—

(i)the provision of banking services by a correspondent to a respondent including providing a current or other liability account and related services, such as cash management, international funds transfers, cheque clearing, providing customers of the respondent with direct access to accounts with the correspondent (and vice versa) and providing foreign exchange services; or

(ii)the relationship between and among credit institutions and financial institutions including where similar services are provided by a correspondent to a respondent, and including relationships established for securities transactions or funds transfers;

(b)a “shell bank” means a credit institution or financial institution, or an institution engaged in equivalent activities to those carried out by credit institutions or financial institutions, incorporated in a jurisdiction in which it has no physical presence involving meaningful decision-making and management, and which is not part of a financial conglomerate or third-country financial conglomerate;

(c)in sub-paragraph (b), “financial conglomerate” and “third-country financial conglomerate” have the meanings given by regulations 1(2) and 7(1) respectively of the Financial Conglomerates and Other Financial Groups Regulations 2004 F188.

Enhanced customer due diligence: politically exposed personsU.K.

35.—(1) A relevant person must have in place appropriate risk-management systems and procedures to determine whether a customer or the beneficial owner of a customer is—

(a)a politically exposed person (a “PEP”); or

(b)a family member or a known close associate of a PEP,

and to manage the enhanced risks arising from the relevant person's business relationship or transactions with such a customer.

(2) In determining what risk-management systems and procedures are appropriate under paragraph (1), the relevant person must take account of—

(a)the risk assessment it carried out under regulation 18(1);

(b)the level of risk of money laundering and terrorist financing inherent in its business;

(c)the extent to which that risk would be increased by its business relationship or transactions with a PEP, or a family member or known close associate of a PEP, and

(d)any relevant information made available to the relevant person under regulations 17(9) and 47.

(3) If a relevant person has determined that a customer or a potential customer is a PEP, or a family member or known close associate of a PEP, the relevant person must assess—

(a)the level of risk associated with that customer, and

(b)the extent of the enhanced customer due diligence measures to be applied in relation to that customer.

(4) In assessing the extent of the enhanced customer due diligence measures to be taken in relation to any particular person (which may differ from case to case), a relevant person—

(a)must take account of any relevant information made available to the relevant person under regulations 17(9) and 47; and

(b)may take into account any guidance which has been—

(i)issued by the FCA; or

(ii)issued by any other supervisory authority or appropriate body and approved by the Treasury.

(5) A relevant person who proposes to have, or to continue, a business relationship with a PEP, or a family member or a known close associate of a PEP, must, in addition to the measures required by regulation 33—

(a)have approval from senior management for establishing or continuing the business relationship with that person;

(b)take adequate measures to establish the source of wealth and source of funds which are involved in the proposed business relationship or transactions with that person; and

(c)where the business relationship is entered into, conduct enhanced ongoing monitoring of the business relationship with that person.

(6) A relevant person which is providing a customer with a contract of long-term insurance (an “insurance policy”) must take reasonable measures to determine whether one or more of the beneficiaries of the insurance policy or the beneficial owner of a beneficiary of such an insurance policy are—

(a)PEPs, or

(b)family members or known close associates of PEPs.

(7) The measures required under paragraph (6) must be taken before—

(a)any payment is made under the insurance policy, or

(b)the benefit of the insurance policy is assigned in whole or in part to another person.

(8) A relevant person must, in addition to the measures required by regulation 33, ensure that—

(a)its senior management is informed before it pays out any sums under an insurance policy the beneficiary of which is a PEP or a person who comes within paragraph (6)(b) in relation to a PEP, and

(b)its entire business relationship with the holder of the insurance policy (“the policy holder”) is scrutinised on an ongoing basis in accordance with enhanced procedures, whether or not the policy holder is a PEP or a family member or known close associate of a PEP.

(9) Where a person who was a PEP is no longer entrusted with a prominent public function, a relevant person must continue to apply the requirements in paragraphs (5) and (8) in relation to that person—

(a)for a period of at least 12 months after the date on which that person ceased to be entrusted with that public function; or

(b)for such longer period as the relevant person considers appropriate to address risks of money laundering or terrorist financing in relation to that person.

(10) Paragraph (9) does not apply in relation to a person who—

(a)was not a politically exposed person within the meaning of regulation 14(5) of the Money Laundering Regulations 2007 F189, when those Regulations were in force; and

(b)ceased to be entrusted with a prominent public function before the date on which these Regulations come into force.

(11) When a person who was a PEP is no longer entrusted with a prominent public function, the relevant person is no longer required to apply the requirements in paragraphs (5) and (8) in relation to a family member or known close associate of that PEP (whether or not the period referred to in paragraph (9) has expired).

(12) In this regulation—

(a)“politically exposed person” or “PEP” means an individual who is entrusted with prominent public functions, other than as a middle-ranking or more junior official;

(b)“family member” of a politically exposed person includes—

(i)a spouse or civil partner of the PEP;

(ii)children of the PEP and the spouses or civil partners of the PEP's children;

(iii)parents of the PEP;

(c)“known close associate” of a PEP means—

(i)an individual known to have joint beneficial ownership of a legal entity or a legal arrangement or any other close business relations with a PEP;

(ii)an individual who has sole beneficial ownership of a legal entity or a legal arrangement which is known to have been set up for the benefit of a PEP.

(13) For the purposes of paragraph (5), a reference to a business relationship with an individual includes a reference to a business relationship with a person of which the individual is a beneficial owner.

(14) For the purposes of paragraphs (9), (11) and (12)(a), individuals entrusted with prominent public functions include—

(a)heads of state, heads of government, ministers and deputy or assistant ministers;

(b)members of parliament or of similar legislative bodies;

(c)members of the governing bodies of political parties;

(d)members of supreme courts, of constitutional courts or of any judicial body the decisions of which are not subject to further appeal except in exceptional circumstances;

(e)members of courts of auditors or of the boards of central banks;

(f)ambassadors, charges d'affaires and high-ranking officers in the armed forces;

(g)members of the administrative, management or supervisory bodies of State-owned enterprises;

(h)directors, deputy directors and members of the board or equivalent function of an international organisation.

(15) For the purpose of deciding whether a person is a known close associate of a politically exposed person, a relevant person need only have regard to information which is in its possession, or to credible information which is publicly available.

Politically exposed persons: other dutiesU.K.

36.—(1) The duty under section 30(1) of the Bank of England and Financial Services Act 2016 (duty to ensure that regulations or orders implementing the fourth money laundering directive comply with paragraphs (a) to (d) of that subsection) F190 does not apply if, and to the extent that, the duty is otherwise satisfied as a result of any provision contained in these Regulations, or any guidance issued by the FCA under these Regulations.

(2) The duty under section 333U(1) and (2) of FSMA (duty to issue guidance in connection with politically exposed persons) F191 does not apply if, and to the extent that, the duty is otherwise satisfied as a result of guidance issued by the FCA under these Regulations.

F191Section 333U was inserted by the Bank of England and Financial Services Act 2016, s.30.

CHAPTER 3U.K.Simplified customer due diligence

Application of simplified customer due diligenceU.K.

37.—(1) A relevant person may apply simplified customer due diligence measures in relation to a particular business relationship or transaction if it determines that the business relationship or transaction presents a low degree of risk of money laundering and terrorist financing, having taken into account—

(a)the risk assessment it carried out under regulation 18(1);

(b)relevant information made available to it under regulations 17(9) and 47; and

(c)the risk factors referred to in paragraph (3).

(2) Where a relevant person applies simplified customer due diligence measures, it must—

(a)continue to comply with the requirements in [F192regulations 28 and 30A], but it may adjust the extent, timing or type of the measures it undertakes under [F193regulation 28] to reflect its determination under paragraph (1); and

(b)carry out sufficient monitoring of any business relationships or transactions which are subject to those measures to enable it to detect any unusual or suspicious transactions.

(3) When assessing whether there is a low degree of risk of money laundering and terrorist financing in a particular situation, and the extent to which it is appropriate to apply simplified customer due diligence measures in that situation, the relevant person must take account of risk factors including, among other things—

(a)customer risk factors, including whether the customer—

(i)is a public administration, or a publicly owned enterprise;

(ii)is an individual resident in a geographical area of lower risk (see sub-paragraph (c));

(iii)is a credit institution or a financial institution which is—

[F194(aa)subject to requirements in national legislation having an equivalent effect to those laid down in the fourth money laundering directive on an obliged entity (within the meaning of that directive); and]

(bb)supervised for compliance with those requirements [F195in a manner equivalent to] section 2 of Chapter VI of the fourth money laundering directive;

(iv)is a company whose securities are listed on a regulated market, and the location of the regulated market;

(b)product, service, transaction or delivery channel risk factors, including whether the product or service is—

(i)a life insurance policy for which the premium is low;

(ii)an insurance policy for a pension scheme which does not provide for an early surrender option, and cannot be used as collateral;

(iii)a pension, superannuation or similar scheme which satisfies the following conditions—

(aa)the scheme provides retirement benefits to employees;

(bb)contributions to the scheme are made by way of deductions from wages; and

(cc)the scheme rules do not permit the assignment of a member's interest under the scheme;

(iv)a financial product or service that provides appropriately defined and limited services to certain types of customers to increase access for financial inclusion purposes in [F196the United Kingdom];

(v)a product where the risks of money laundering and terrorist financing are managed by other factors such as purse limits or transparency of ownership;

(vi)a child trust fund within the meaning given by section 1(2) of the Child Trust Funds Act 2004 F197;

(vii)a junior ISA within the meaning given by regulation 2B of the Individual Savings Account Regulations 1998 F198;

(c)geographical risk factors, including whether the country where the customer is resident, established or registered or in which it operates is—

(i)[F199the United Kingdom];

(ii)a third country which has effective systems to counter money laundering and terrorist financing;

(iii)a third country identified by credible sources as having a low level of corruption or other criminal activity, such as terrorism (within the meaning of section 1 of the Terrorism Act 2000 F200), money laundering, and the production and supply of illicit drugs;

(iv)a third country which, on the basis of credible sources, such as evaluations, detailed assessment reports or published follow-up reports published by the Financial Action Task Force, the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development or other international bodies or non-governmental organisations—

(aa)has requirements to counter money laundering and terrorist financing that are consistent with the revised Recommendations published by the Financial Action Task Force in February 2012 and updated in October 2016; and

(bb)effectively implements those Recommendations.

(4) In making the assessment referred to in paragraph (3), relevant persons must bear in mind that the presence of one or more risk factors may not always indicate that there is a low risk of money laundering and terrorist financing in a particular situation.

(5) A relevant person may apply simplified customer due diligence measures where the customer is a person to whom paragraph (6) applies and the product is an account into which monies are pooled (the “pooled account”), provided that—

(a)the business relationship with the holder of the pooled account presents a low degree of risk of money laundering and terrorist financing; and

(b)information on the identity of the persons on whose behalf monies are held in the pooled account is available, on request to the relevant person where the pooled account is held.

(6) This paragraph applies to—

(a)a relevant person who is subject to these Regulations under regulation 8;

[F201(b)a person who carries on business in a third country who is—

(i)subject to requirements in national legislation having an equivalent effect to those laid down in the fourth money laundering directive on an obliged entity (within the meaning of that directive); and

(ii)supervised for compliance with those requirements in a manner equivalent to section 2 of Chapter VI of the fourth money laundering directive.]

F202(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) A relevant person must not continue to apply simplified customer due diligence measures under paragraph (1)—

(a)if it doubts the veracity or accuracy of any documents or information previously obtained for the purposes of identification or verification;

(b)if its risk assessment changes and it no longer considers that there is a low degree of risk of money laundering and terrorist financing;

(c)if it suspects money laundering or terrorist financing; or

(d)if any of the conditions set out in regulation 33(1) apply.

F198S.I. 1998/1870. Regulation 2B was inserted by S.I. 2011/1780.

Electronic moneyU.K.

38.—(1) Subject to paragraph (3), a relevant person is not required to apply customer due diligence measures in relation to electronic money, and regulations 27, 28, 30 and 33 to 37 do not apply provided that—

(a)the maximum amount which can be stored electronically is [F203150 euros];

(b)the payment instrument used in connection with the electronic money (“the relevant payment instrument”) is—

(i)not reloadable; or

(ii)is subject to a maximum limit on monthly payment transactions of [F204150 euros] which can only be used in the United Kingdom;

(c)the relevant payment instrument is used exclusively to purchase goods or services;

(d)anonymous electronic money cannot be used to fund the relevant payment instrument.

(2) Paragraph (1) does not apply to any transaction which consists of the redemption in cash, or a cash withdrawal, of the monetary value of the electronic money, [F205where—

(a)the amount redeemed exceeds 50 euros; or

(b)in the case of remote payment transactions, the amount redeemed exceeds 50 euros per transaction.]

(3) The issuer of the relevant payment instrument must carry out sufficient monitoring of its business relationship with the users of electronic money and of transactions made using the relevant payment instrument to enable it to detect any unusual or suspicious transactions.

(4) A relevant person is not prevented from applying simplified customer due diligence measures in relation to electronic money because the conditions set out in paragraph (1) are not satisfied, provided that such measures are permitted under regulation 37.

[F206(4A) Credit institutions and financial institutions, acting as acquirers for payment using an anonymous prepaid card issued in a third country, shall only accept payment where—

(a)the anonymous prepaid card is subject to requirements in national legislation having an equivalent effect to those laid down in this regulation; and

(b)the anonymous prepaid card satisfies those requirements.]

[F207(5) For the purposes of this regulation—

(a)“acquirer” means a payment service provider contracting with a payee to accept and process card-based payment transactions, which result in a transfer of funds to the payee;

(b)“payment instrument” has the meaning given by regulation 2(1) of the Electronic Money Regulations 2011 F208;

(c)“remote payment transaction” has the meaning given by regulation 2 of the Payment Services Regulations 2017 F209.]

PART 4 U.K.Reliance and Record-keeping

RelianceU.K.

39.—(1) A relevant person may rely on a person who falls within paragraph (3) (“the third party”) to apply any of the customer due diligence measures required by regulation 28(2) to (6) and (10) [F210, or to carry out any of the measures required by regulation 30A,] but, notwithstanding the relevant person's reliance on the third party, the relevant person remains liable for any failure to apply such measures.

(2) When a relevant person relies on the third party to apply customer due diligence measures [F211or carry out any of the measures required by regulation 30A] under paragraph (1) it—

(a)must immediately obtain from the third party all the information needed to satisfy the requirements of regulation 28(2) to (6) and (10) [F212and regulation 30A] in relation to the customer, customer's beneficial owner, or any person acting on behalf of the customer;

(b)must enter into arrangements with the third party which—

(i)enable the relevant person to obtain from the third party immediately on request copies of any identification and verification data and any other relevant documentation on the identity of the customer, customer's beneficial owner, or any person acting on behalf of the customer;

(ii)require the third party to retain copies of the data and documents referred to in paragraph (i) for the period referred to in regulation 40.

(3) The persons within this paragraph are—

(a)another relevant person who is subject to these Regulations under regulation 8;

F213(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(c)a person who carries on business in a third country who is—

(i)subject to requirements in relation to customer due diligence and record keeping which are equivalent to those laid down in the fourth money laundering directive; and

(ii)supervised for compliance with those requirements in a manner equivalent to section 2 of Chapter VI of the fourth money laundering directive;

(d)organisations whose members consist of persons within sub-paragraph (a)F214... or (c).

(4) A relevant person may not rely on a third party established in [F215a high-risk third country], and for these purposes “high-risk third country” has the meaning given in regulation 33(3).

(5) Paragraph (4) does not apply to a branch or majority owned subsidiary of an entity F216... if all the following conditions are met—

[F217(a)the entity is—

(i)a person who is subject to the requirements in these Regulations as a relevant person within the meaning of regulation 8 and who is supervised for compliance with them; or

(ii)subject to requirements in national legislation having an equivalent effect to those laid down in the fourth money laundering directive on an obliged entity (within the meaning of that directive) and supervised for compliance with those requirements in a manner equivalent to section 2 of Chapter VI of the fourth money laundering directive;]

[F218(b)the branch or subsidiary complies fully with procedures and policies established for the group under—

(i)regulation 20 of these Regulations, or

(ii)requirements in national legislation having an equivalent effect to those laid down Article 45 of the fourth money laundering directive.]

(6) A relevant person is to be treated by a supervisory authority as having complied with the requirements of paragraph (2) if—

(a)the relevant person is relying on information provided by a third party which is a member of the same group as the relevant person;

(b)that group applies customer due diligence measures, rules on record keeping and programmes against money laundering and terrorist financing in accordance with these Regulations, the fourth money laundering directive or rules having equivalent effect; and

(c)the effective implementation of the requirements referred to in sub-paragraph (b) is supervised at group level by—

(i)an authority of an EEA state F219... with responsibility for the functions provided for in the fourth money laundering directive; or

(ii)an equivalent authority of a third country.

(7) Nothing in this regulation prevents a relevant person applying customer due diligence measures [F220, or carrying out any of the measures required by regulation 30A,] by means of an agent or an outsourcing service provider provided that the arrangements between the relevant person and the agent or outsourcing service provider provide for the relevant person to remain liable for any failure to apply such measures.

(8) For the purposes of paragraph (7), an “outsourcing service provider” means a person who—

(a)performs a process, a service or an activity that would otherwise be undertaken by the relevant person, and

(b)is not an employee of the relevant person.

Record-keepingU.K.

40.—(1) Subject to paragraph (5), a relevant person must keep the records specified in paragraph (2) for at least the period specified in paragraph (3).

(2) The records are—

(a)a copy of any documents and information obtained by the relevant person to satisfy the customer due diligence requirements in regulations 28, 29 and 33 to 37 [F221and the requirements of regulation 30A];

(b)sufficient supporting records (consisting of the original documents or copies) in respect of a transaction (whether or not the transaction is an occasional transaction) which is the subject of customer due diligence measures or ongoing monitoring to enable the transaction to be reconstructed.

(3) Subject to paragraph (4), the period is five years beginning on the date on which the relevant person knows, or has reasonable grounds to believe—

(a)that the transaction is complete, for records relating to an occasional transaction; or

(b)that the business relationship has come to an end for records relating to—

(i)any transaction which occurs as part of a business relationship, or

(ii)customer due diligence measures taken in connection with that relationship.

(4) A relevant person is not required to keep the records referred to in paragraph (3)(b)(i) for more than 10 years.

(5) Once the period referred to in paragraph (3), or if applicable paragraph (4), has expired, the relevant person must delete any personal data obtained for the purposes of these Regulations unless—

(a)the relevant person is required to retain records containing personal data—

(i)by or under any enactment, or

(ii)for the purposes of any court proceedings;

(b)the data subject has given consent to the retention of that data; or

(c)the relevant person has reasonable grounds for believing that records containing the personal data need to be retained for the purpose of legal proceedings.

(6) A relevant person who is relied on by another person must keep the records specified in paragraph (2) for the period referred to in paragraph (3) or, if applicable, paragraph (4).

(7) A person referred to in regulation 39(3) (“A”) who is relied on by a relevant person (“B”) must, if requested by B within the period referred to in paragraph (3) or, if applicable, paragraph (4), immediately—

(a)make available to B any information about the customer, any person purporting to act on behalf of the customer and any beneficial owner of the customer, which A obtained when applying customer due diligence measures; and

(b)forward to B copies of any identification and verification data and other relevant documents on the identity of the customer, any person purporting to act on behalf of the customer and any beneficial owner of the customer, which A obtained when applying those measures.

(8) Paragraph (7) does not apply where a relevant person applies customer due diligence measures by means of an agent or an outsourcing service provider (within the meaning of regulation 39(8)).

(9) For the purposes of this regulation—

(a)B relies on A where B does so in accordance with regulation 39(1);

(b)copy” means a copy of the original document which would be admissible as evidence of the original document in court proceedings;

[F222(c)data subject” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);

(d)personal data” has the same meaning as in Parts 5 to 7 of that Act (see section 3(2) and (14) of that Act).]

Data ProtectionU.K.

41.—(1) Any personal data obtained by relevant persons for the purposes of these Regulations may only be processed for the purposes of preventing money laundering or terrorist financing.

F223(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) No other use may be made of personal data referred to in paragraph (1), unless—

(a)use of the data is permitted by or under an enactment other than these Regulations [F224or the [F225UK GDPR]]; or

(b)the relevant person has obtained the consent of the data subject to the proposed use of the data.

F226(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F226(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F227(6) Before establishing a business relationship or entering into an occasional transaction with a new customer, as well as providing the customer with the information required under Article 13 of the [F228UK GDPR] (information to be provided where personal data are collected from the data subject), relevant persons must provide the customer with a statement that any personal data received from the customer will be processed only—

(a)for the purposes of preventing money laundering or terrorist financing, or

(b)as permitted under paragraph (3).

(7) In Article 6(1) of the [F229UK GDPR] (lawfulness of processing), the reference in point (e) to processing of personal data that is necessary for the performance of a task carried out in the public interest includes processing of personal data in accordance with these Regulations that is necessary for the prevention of money laundering or terrorist financing.

(8) In the case of sensitive processing of personal data for the purposes of the prevention of money laundering or terrorist financing, section 10 of, and Schedule 1 to, the Data Protection Act 2018 make provision about when the processing meets a requirement in Article 9(2) or 10 of the [F230UK GDPR] for authorisation under the law of the United Kingdom (see, for example, paragraphs 10, 11 and 12 of that Schedule).

(9) In this regulation—

data subject” has the same meaning as in the Data Protection Act 2018 (see section 3 of that Act);

personal data” and “processing” have the same meaning as in Parts 5 to 7 of that Act (see section 3(2), (4) and (14) of that Act);

sensitive processing” means the processing of personal data described in Article 9(1) or 10 of the [F231UK GDPR] (special categories of personal data and personal data relating to criminal convictions and offences etc).]

PART 5U.K.Beneficial Ownership Information

Application of this PartU.K.

42.—(1) This Part applies to UK bodies corporate and relevant trusts.

(2) For the purposes of this Part—

(a)a “UK body corporate” is a body corporate which is incorporated under the law of the United Kingdom or any part of the United Kingdom, and includes an eligible Scottish partnership;

(b)a “relevant trust” is—

(i)a UK trust which is an express trust; F232...

(ii)a non-UK trust which is an express trust; and

(aa)receives income from a source in the United Kingdom; or

(bb)has assets in the United Kingdom,

on which it is liable to pay one or more of the taxes referred to in regulation 45(14); [F233or

(iii)any other non-UK trust which is an express trust, is not a trust listed in Schedule 3A (excluded trusts) and whose trustees (in their capacity as such)—

(aa)acquire an interest in land in the United Kingdom; or

(bb)enter into a business relationship with a relevant person, where at least one of those trustees is resident in the United Kingdom and the trust is not an EEA registered trust;]

(c)a trust is a “UK trust” if—

(i)all the trustees are resident in the United Kingdom; or

(ii)sub-paragraph (d) applies;

(d)this sub-paragraph applies if—

(i)at least one trustee is resident in the United Kingdom, and

(ii)the settlor was resident and domiciled in the United Kingdom at the time when—

(aa)the trust was set up, or

(bb)the settlor added funds to the trust;

(e)a trust is a “non-UK trust” if it is not a UK trust;

(f)a “collective investment scheme” has the meaning given in regulation 12H of the International Tax Compliance Regulations 2015 F234.

(3) A trustee or settlor is resident in the United Kingdom—

(a)in the case of a body corporate, if it is a UK body corporate;

(b)in the case of an individual, if the individual is resident in the United Kingdom for the purposes of one or more of the taxes referred to in regulation 45(14).

[F235[F236(4) For the purposes of this Part, an “EEA registered trust” is a trust established in a country or territory other than the United Kingdom where national legislation applies having a broadly equivalent effect to the requirements laid down in the fourth money laundering directive.]

(5) For the purposes of this Part, the trustees acquire an interest in land in the United Kingdom where at least one of the trustees becomes registered—

(a)in the register of title kept under the Land Registration Act 2002 as the proprietor of—

(i)a freehold estate in land; or

(ii)a leasehold estate in land granted for a term of more than 7 years from the date of the grant;

(b)in the Land Register of Scotland as the proprietor or as the tenant under a lease (“lease” and “proprietor” having the meanings given by section 113(1) of the Land Registration etc. (Scotland) Act 2012); or

(c)in the register kept under the Land Registration Act (Northern Ireland) 1970 as the owner of—

(i)a freehold estate in land; or

(ii)a leasehold estate in land granted for a term of more than 21 years from the date of the grant.

(6) For the purposes of this Part—

(a)the trustees have a controlling interest in a third country entity if they meet any of the specified conditions in paragraphs 2 to 5 of Schedule 1A to the Companies Act 2006 (people with significant control over a company) where that Schedule is read with the following modifications—

(i)references to X having or holding a share in or a right in relation to, or exercising significant influence or control over, company Y are to be read as references to the trustees (in their capacity as such) having or holding a share in or a right in relation to, or exercising significant influence or control over, the third country entity;

(ii)for “25%” wherever it occurs in each of paragraphs 2 (ownership of shares), 3 (voting rights), 13 (calculating shareholdings), and 14 (voting rights), read “50%”; and

[F237(b)“third country entity” means a body corporate, partnership or other entity that—

(i)is governed by the law of a country or territory other than the United Kingdom and (in each case) is a legal person under that law, and

(ii)is not subject to national legislation having a broadly equivalent effect to the requirements laid down in Article 30 of the fourth money laundering directive.]]

Corporate bodies: obligationsU.K.

43.—(1) When a UK body corporate which is not listed on a regulated market enters into a relevant transaction with a relevant person, or forms a business relationship with a relevant person, the body corporate must on request from the relevant person provide the relevant person with—

(a)information identifying—

(i)its name, registered number, registered office and principal place of business;

(ii)its board of directors, or if there is no board, the members of the equivalent management body;

(iii)the senior persons responsible for its operations;

(iv)the law to which it is subject;

(v)its legal owners;

(vi)its beneficial owners; and

(b)its articles of association or other governing documents.

(2) For the purposes of paragraph (1)(a)(v) and (vi), references to the legal owners and beneficial owners of a UK body corporate include a reference to the legal owners and beneficial owners of any body corporate or trust which is directly or indirectly a legal owner or beneficial owner of that body corporate.

(3) Paragraph (1)(a)(vi) does not apply if no person qualifies as a beneficial owner (within the meaning of regulation 5(1)) of—

(a)the UK body corporate; or

(b)any body corporate which is directly or indirectly the owner of that UK body corporate.

(4) If, during the course of a business relationship, there is any change in the identity of the individuals or information falling within paragraph (1), the UK body corporate referred to in paragraph (1) must notify the relevant person of the change and the date on which it occurred within fourteen days from the date on which the body corporate becomes aware of the change.

(5) The UK body corporate must on request provide all or part of the information referred to in paragraph (1) to a law enforcement authority.

(6) Information requested under paragraph (5), must be provided before the end of such reasonable period as may be specified by the law enforcement authority.

(7) The provision of information in accordance with this regulation is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(8) Where a disclosure is made in good faith in accordance with this regulation no civil liability arises in respect of the disclosure on the part of the UK body corporate.

(9) For the purposes of this regulation, a “relevant transaction” means a transaction in relation to which the relevant person is required to apply customer due diligence measures under regulation 27.

Trustee obligationsU.K.

44.—(1) The trustees of a relevant trust must maintain accurate and up-to-date records in writing of all the beneficial owners of the trust, and of any potential beneficiaries referred to in paragraph (5)(b), containing the information required by regulation 45(2)(b) to (d) and (5)(f) and (g).

(2) When a trustee of a relevant trust, acting as trustee, enters into a relevant transaction with a relevant person, or forms a business relationship with a relevant person, the trustee must—

(a)inform the relevant person that it is acting as trustee; and

(b)on request from the relevant person, provide the relevant person with information identifying all the beneficial owners of the trust (which, in the case of a class of beneficiaries, may be done by describing the class of persons who are beneficiaries or potential beneficiaries under the trust).

(3) If, during the course of a business relationship, there is any change in the information provided under paragraph (2), the trustees must notify the relevant person of the change and the date on which it occurred within fourteen days from the date on which any one of the trustees became aware of the change.

(4) For the purposes of this regulation, a “relevant transaction” means a transaction in relation to which the relevant person is required to apply customer due diligence measures under regulation 27.

(5) The trustees of a relevant trust must on request provide information to any law enforcement authority—

(a)about the beneficial owners of the trust; and

(b)about any other individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes.

(6) Information requested under paragraph (5) must be provided before the end of such reasonable period as may be specified by the law enforcement authority.

(7) The provision of information in accordance with this regulation is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(8) Where a disclosure is made in good faith in accordance with this regulation no civil liability arises in respect of the disclosure on the part of the trustees of a relevant trust.

(9) If the trustees of a relevant trust are relevant persons who are being paid to act as trustees of that trust, they must—

(a)retain the records referred to in paragraph (1) for a period of five years after the date on which the final distribution is made under the trust;

(b)make arrangements for those records to be deleted at the end of that period, unless—

(i)the trustees are required to retain them by or under any enactment or for the purpose of court proceedings;

(ii)any person to whom information in a record relates consents to the retention of that information; or

(iii)the trustees have reasonable grounds for believing that records containing the personal data need to be retained for the purpose of legal proceedings.

(10) For the purposes of this regulation, any of the following authorities is a law enforcement authority—

(a)the Commissioners;

(b)the FCA;

(c)the NCA;

(d)police forces maintained under section 2 of the Police Act 1996 F238;

(e)the Police of the Metropolis;

(f)the Police for the City of London;

(g)the Police Service of Scotland;

(h)the Police Service of Northern Ireland;

(i)the Serious Fraud Office.

(11) For the purposes of this regulation, in the case of a relevant trust which is a collective investment scheme, a reference to the trustees of a relevant trust includes a reference to the manager or operator of the collective investment scheme.

F2381996 c.16. Section 2 was amended by paragraphs 3 and 4 of Schedule 16 to the Police Reform and Social Responsibility Act 2011 (c.13).

Register of beneficial ownershipU.K.

45.—(1) The Commissioners must maintain a register (“the register”) of—

(a)beneficial owners of taxable relevant trusts; and

(b)potential beneficiaries (referred to in regulation 44(5)(b)) of taxable relevant trusts.

(2) The trustees of a taxable relevant trust must within the time specified in paragraph (3) provide the Commissioners with—

(a)the information specified in paragraph (5) in relation to the trust;

(b)the information specified in paragraph (6) in relation to each of the individuals referred to in regulation 44(2)(b) and (5)(b) (but if sub-paragraph (d) applies, this information does not need to be provided in relation to the beneficiaries of the trust);

(c)the information specified in paragraph (7) in relation to each of the legal entities referred to in regulation 44(2)(b);

(d)the information specified in paragraph (8), where the beneficial owners include a class of beneficiaries, not all of whom have been determined.

[F239(3) The information required under paragraph (2) must, apart from any information already provided to the Commissioners under regulation 45ZA (at a time when the trust was not a taxable relevant trust), be provided—

(a)on or before 31st January after the tax year in which the trustees were first liable to pay any of the taxes referred to in paragraph (14) (“UK taxes”), in the case of a trust which is set up before 6th April 2021;

(b)on or before [F2401st September 2022], in the case of a trust which is set up after 5th April 2021 where the trustees become liable to pay UK taxes before [F2414th June 2022];

(c)within [F24290 days] of the trustees becoming liable to pay UK taxes, in any other case.]

(4) The information required under [F243paragraphs (2) and (9)] must be provided in such form as the Commissioners reasonably require.

(5) The information specified in this paragraph is—

(a)the full name of the trust;

(b)the date on which the trust was set up;

(c)a statement of accounts for the trust, describing the trust assets and identifying the value of each category of the trust assets at the date on which the information is first provided to the Commissioners (including the address of any property held by the trust);

(d)the country where the trust is considered to be resident for tax purposes;

(e)the place where the trust is administered;

(f)a contact address for the trustees;

(g)the full name of any advisers who are being paid to provide legal, financial or tax advice to the trustees in relation to the trust.

(6) The information specified in this paragraph is—

(a)the individual's full name;

(b)the individual's national insurance number or unique taxpayer reference, if any;

(c)if the individual does not have a national insurance number or unique taxpayer reference, the individual's usual residential address;

(d)if the address provided under sub-paragraph (c) is not in the United Kingdom—

(i)the individual's passport number or identification card number, with the country of issue and the expiry date of the passport or identification card; or

(ii)if the individual does not have a passport or identification card, the number, country of issue and expiry date of any equivalent form of identification;

(e)the individual's date of birth;

(f)the nature of the individual's role in relation to the trust.

(7) The information specified in this paragraph is—

(a)the legal entity's corporate or firm name;

(b)the legal entity's unique taxpayer reference, if any;

(c)the registered or principal office of the legal entity;

(d)the legal form of the legal entity and the law by which it is governed;

(e)if applicable, the name of the register of companies in which the legal entity is entered (including details of the [F244country] in which it is registered), and its registration number in that register;

(f)the nature of the entity's role in relation to the trust.

(8) The information specified in this paragraph is a description of the class of persons who are beneficiaries or potential beneficiaries under the trust.

(9) The trustees of a taxable relevant trust must—

(a)if a trustee becomes aware that any of the information provided to the Commissioners under paragraph (2) (other than information provided in relation to the value of the trust assets under paragraph (5)(c)) has changed, notify the Commissioners of the change and the date on which it occurred on or before 31st January—

(i)after the tax year in which the change occurred; or

(ii)if the trustees are not liable to pay any UK taxes in that year, after the tax year in which the trustees are liable to pay any UK taxes; or

(b)if the trustees are not aware of any change to any of the information provided under paragraph (2), confirm that fact to the Commissioners on or before 31st January after the tax year in which the trustees are liable to pay any UK taxes.

[F245(10) The register must contain the information referred to in—

(a)regulation 44(2)(b) and (5)(b), in relation to taxable relevant trusts;

(b)regulation 44(2)(b) and (5)(b) and paragraphs (10E) to (10G), in relation to the types of taxable relevant trust mentioned in paragraphs (10A) to (10C);

(c)regulation 45ZA(3) and (4), in relation to the types of trust mentioned in regulation 45ZA(1).]

[F246(10A) The trustees of a taxable relevant trust which is a UK trust, and is not an EEA registered trust or a trust listed in Schedule 3A, must provide the Commissioners with the information specified in paragraph (10E), apart from any information already provided to the Commissioners under regulation 45ZA (at a time when the trust was not a taxable relevant trust)—

(a)on or before [F2471st September 2022], where the trustees become liable to pay UK taxes before [F2484th June 2022];

(b)within [F24990 days] of the trustees becoming liable to pay UK taxes, in any other case.

(10B) This paragraph applies to the trustees of a taxable relevant trust which is a non-UK trust, has at least one trustee resident in the United Kingdom and is not an EEA registered trust or a trust falling within Schedule 3A, where the trustees of that trust, in their capacity as such—

(a)enter into a business relationship with a relevant person; or

(b)acquire an interest in land in the United Kingdom.

(10C) This paragraph applies to the trustees of a taxable relevant trust which is a non-UK trust and is not a trust listed in Schedule 3A, where none of the trustees are resident in the United Kingdom and those trustees, in their capacity as such, acquire an interest in land in the United Kingdom.

(10D) Where paragraph (10B) or (10C) applies, the trustees must provide the Commissioners with the information specified in paragraph (10E), apart from any information already provided to the Commissioners under regulation 45ZA (at a time when the trust was not a taxable relevant trust)—

(a)on or before [F2501st September 2022], where the trustees become liable to pay UK taxes before [F2514th June 2022];

(b)otherwise, within [F25290 days] of the trustees acquiring the land or (where paragraph (10B)(a) applies) entering into the business relationship.

(10E) The trustees must provide the Commissioners with the following information in relation to each of the beneficial owners of the trust who is an individual, and in relation to any other individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes—

(a)the individual’s country of residence;

(b)the individual’s nationality;

(c)the nature and extent of the individual’s beneficial interest,

but if paragraph (10F) applies, this information does not need to be provided in relation to the beneficiaries of the trust.

(10F) Where the beneficial owners include a class of beneficiaries, not all of whom have been determined, the information to be provided under paragraph (10E) is a description of the class of persons who are beneficiaries or potential beneficiaries under the trust.

(10G) The trustees of a trust to which paragraph (10A) or (10B) applies must—

(a)if they have a controlling interest in a third country entity, provide the Commissioners with the following information, apart from any information already provided under regulation 45ZA(4), at the same time as providing the information under paragraph (10E)—

(i)the third country entity’s corporate or firm name;

(ii)the country or territory by whose law the third country entity is governed;

(iii)the registered or principal office of the third country entity;

(b)if they acquire an interest in a third country entity after providing the information under paragraph (10E), provide the Commissioners with the information specified in this paragraph within [F25390 days] of the date on which they acquired that interest.

(10H) The trustees of a taxable relevant trust to which paragraph (10A), (10B) or (10C) applies must, if the trustee becomes aware that any of the information provided to the Commissioners under paragraphs (10E) to (10G) has changed, notify the Commissioners of the change and the date on which it occurred within [F25490 days] of the trustee becoming aware of the change.

(10I) The information required under paragraphs (10E) to (10H) must be provided in such form as the Commissioners reasonably require.

(10J) The Commissioners must keep the information referred to in paragraph (10) on the register for at least five years, and no more than 10 years, after the trust to which it relates has ceased to exist or has ceased to be a type of trust referred to in paragraph (10).]

(11) The Commissioners may keep the register in any form they think fit.

(12) The Commissioners must ensure that the information on the register may be inspected by any law enforcement authority.

(13) The Commissioners [F255may] make arrangements to ensure that the NCA are able to use information on the register to respond promptly to a request for information about the persons referred to in regulation 44(2)(b) and (5)(b) [F256, paragraphs (10E) to (10G) and regulation 45ZA(3) and (4)] made by—

(a)an authority responsible for functions[F257equivalent to those provided for in these Regulations in a third country, or]

(b)a financial intelligence unit of [F258a third country].

(14) For the purposes of this regulation, a taxable relevant trust is a relevant trust in any year in which its trustees are liable to pay any of the following taxes in the United Kingdom in relation to assets or income of the trust—

(a)income tax;

(b)capital gains tax;

(c)inheritance tax;

(d)stamp duty land tax (within the meaning of section 42 of the Finance Act 2003 F259);

(e)land and buildings transaction tax (within the meaning of section 1 of the Land and Buildings Transaction Tax (Scotland) Act 2013 F260);

[F261(ea)land transaction tax (within the meaning of section 2 of the Land Transaction Tax and Anti-avoidance of Devolved Taxes (Wales) Act 2017);]

(f)stamp duty reserve tax.

(15) For the purpose of this regulation, in the case of a taxable relevant trust which is a collective investment scheme, a reference to the trustees of a taxable relevant trust includes a reference to the manager or operator of the collective investment scheme.

[F262Register of beneficial ownership: additional types of trustU.K.

45ZA.(1) In relation to trusts which are—

(a)type A trusts, other than taxable relevant trusts;

(b)type B trusts, other than taxable relevant trusts;

(c)type C trusts, other than taxable relevant trusts,

the information to be contained in the register maintained under this Part is the information referred to in paragraphs (3) and (4), and in this paragraph, “taxable relevant trust” has the meaning given in regulation 45.

(2) For the purposes of this regulation—

(a)a “type A trust” is a UK trust which is an express trust and is not an EEA registered trust or a trust listed in Schedule 3A;

(b)a “type B trust” is a non-UK trust which has at least one trustee resident in the United Kingdom, is an express trust and is not an EEA registered trust or a trust listed in Schedule 3A, where the trustees of that trust, in their capacity as such—

(i)enter into a business relationship with a relevant person; or

(ii)acquire an interest in land in the United Kingdom;

(c)a “type C trust” is a non-UK trust which is an express trust and is not a trust listed in Schedule 3A, where none of the trustees are resident in the United Kingdom and those trustees, in their capacity as such, acquire an interest in land in the United Kingdom.

(3) The trustees of a trust to which paragraph (1) applies must, within the time specified in paragraph (5), provide the Commissioners with the following information, apart from any information already provided to the Commissioners under regulation 45 (at a time when the trust was a taxable relevant trust within the meaning of that regulation)—

(a)the information specified in paragraphs (i) to (v) in relation to each of the beneficial owners of the trust who is an individual, and in relation to any other individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes—

(i)the individual’s full name;

(ii)the individual’s month and year of birth;

(iii)the individual’s country of residence;

(iv)the individual’s nationality;

(v)the nature and extent of the individual’s beneficial interest,

but if sub-paragraph (b) applies, this information does not need to be provided in relation to the beneficiaries of the trust;

(b)where the beneficial owners include a class of beneficiaries, not all of whom have been determined, a description of the class of persons who are beneficiaries or potential beneficiaries under the trust;

(c)the information specified in paragraphs (i) to (iii) in relation to each of the beneficial owners of the trust who is a legal entity—

(i)the legal entity’s corporate or firm name;

(ii)the registered or principal office of the legal entity;

(iii)the nature of the entity’s role in relation to the trust.

(4) The trustees of a trust to which paragraph (1)(a) or (b) applies must—

(a)if they have a controlling interest in a third country entity, provide the Commissioners with the following information, apart from any information already provided under regulation 45(10G), at the same time as providing the information under paragraph (3)—

(i)the third country entity’s corporate or firm name;

(ii)the country or territory by whose law the third country entity is governed;

(iii)the registered or principal office of the third country entity;

(b)if they acquire an interest in a third country entity after providing the information under paragraph (3), provide the Commissioners with the information specified in this paragraph within [F26390 days] of the date on which they acquired that interest.

(5) The information required under paragraph (3) must be provided—

(a)on or before [F2641st September 2022], in the case of a trust which first falls within paragraph (1)(a), (b) or (c) before [F2654th June 2022];

(b)in any other case, within [F26690 days] of the trust being set up, or, if later, within [F26690 days] of the trust first falling within paragraph (1)(a), (b) or (c).

(6) If a trustee becomes aware that any of the information provided to the Commissioners under paragraph (3) or (4) has changed, the trustee must notify the Commissioners of the change within [F26790 days] of the trustee becoming aware of the change.

(7) The information required under paragraphs (3), (4) and (6) must be provided in such form as the Commissioners reasonably require. ]

[F268Access to information on the registerU.K.

45ZB.(1) The Commissioners must make the accessible information available to a person who demonstrates to the Commissioners a legitimate interest in the beneficial ownership of a trust, where that person so requests.

(2) The Commissioners must make available to a trustee, on a request by that trustee, such information as the trustee reasonably requires in order to enable a relevant person to meet the relevant person’s obligations under Part 3, where that relevant person proposes to—

(a)form a business relationship with the trust; or

(b)enter into a transaction with the trust in relation to which the relevant person is required to apply customer due diligence measures under regulation 27.

(3) The Commissioners must make the accessible information available to a person who makes a written request about a type A trust or a type B trust (within the meaning given in regulation 45ZA(2)), where the trustees of that trust have a controlling interest in a third country entity.

(4) The Commissioners may—

(a)charge a fee to any person making a request for accessible information under paragraph (1) or (3), which must not exceed such amount as the Commissioners consider will enable them to meet any expenses reasonably incurred by them in dealing with such requests, including expenses incurred in maintaining the register;

(b)require the person to submit the request in such a manner as the Commissioners may reasonably require, including by requiring the person to register in a manner specified by the Commissioners; and

(c)require the person to provide such information to support the request as the Commissioners may specify.

(5) Paragraphs (1) and (3) do not apply to the accessible information in a case where, and to the extent that, the Commissioners consider that the information should be exempt because—

(a)the Commissioners consider that making the information available would expose the beneficial owner to a disproportionate risk of fraud, kidnapping, blackmail, extortion, harassment, violence or intimidation;

(b)the beneficial owner is under the age of 18; or

(c)the beneficial owner—

(i)lacks capacity within the meaning of section 2 of the Mental Capacity Act 2005;

(ii)is incapable within the meaning of section 1 of the Adults with Incapacity (Scotland) Act 2000; or

(iii)is incapable by reason of mental disorder within the meaning of Article 3(1) of the Mental Health (Northern Ireland) Order 1986,

and in this paragraph, references to the beneficial owner include references to any other individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes.

(6) Where the Commissioners decide to exempt any of the accessible information in accordance with paragraph (5), the Commissioners must inform the person requesting the information of the decision, explain that the person is entitled to seek a review, and specify the period in which the person must inform the Commissioners that the person wishes to seek a review (which must not be less than 30 days beginning with the day on which the person is informed of the decision).

(7) If the person seeks a review, the Commissioners may decide to—

(a)uphold the decision to exempt the information;

(b)make the information available; or

(c)exempt less of the requested information and make more of the requested information available,

and must inform the person who made the request of their decision.

(8) For the purposes of this regulation, the “accessible information” means the details specified in paragraph (9) or (10) which are held on the register in relation to a beneficial owner of a type A trust or a type B trust (within the meaning given in regulation 45ZA(2)), or in relation to an individual referred to as a potential beneficiary in a document from the settlor relating to the trust such as a letter of wishes.

(9) The details are, in relation to an individual—

(a)the individual’s full name;

(b)the individual’s month and year of birth;

(c)the individual’s country of residence;

(d)the individual’s nationality;

(e)the nature and extent of the individual’s beneficial interest.

(10) The details are, in relation to a legal entity—

(a)the legal entity’s corporate or firm name;

(b)the registered or principal office of the legal entity;

(c)the nature of the entity’s role in relation to the trust.

(11) For the purposes of this regulation, the Commissioners must take account of the following when determining whether a person has a legitimate interest in the beneficial ownership of a trust—

(a)whether the person is involved in an investigation into money laundering or terrorist financing;

(b)whether the person is making the request for accessible information in order to further an investigation into a specified suspected instance of money laundering or terrorist financing;

(c)whether the disclosure of the information to that person would be likely to prejudice—

(i)any criminal investigation or criminal proceedings;

(ii)any other investigation mentioned in section 342(1) of the Proceeds of Crime Act 2002 (offences of prejudicing investigation); or

(iii)any investigation by an appropriate officer (within the meaning given in regulation 87(10)) into a potential contravention of a relevant requirement,

which is or are being, or is or are about to be, conducted;

(d)whether, having regard to the information produced by the person making the request, it is reasonable for that person to suspect that the trust is being used for money laundering or terrorist financing.]

[F269PART 5AU.K.Requests for information about accounts and safe-deposit boxes

Duty to establish mechanism for requestsU.K.

45A.  The Secretary of State or the Treasury must ensure that a central automated mechanism (referred to in this Part as “the central automated mechanism”) is established for making and responding to requests under this Part.

Duty to respond to requests for informationU.K.

45B.(1) Each credit institution and provider of safe custody services must establish and maintain systems which enable that institution or provider to respond, using the central automated mechanism, to a request for information made under this Part by a law enforcement authority or the Gambling Commission.

(2) A credit institution or provider of safe custody services who receives such a request must, using the central automated mechanism, provide the information requested fully and rapidly to the person who made the request.

Requests for information about accountsU.K.

45C.(1) A law enforcement authority or the Gambling Commission may make a request, using the central automated mechanism—

(a)to a credit institution other than a credit union, for any information specified in this regulation relating to an account held with that institution;

(b)to a credit union, for any information specified in this regulation relating to an account held with that credit union which has an International Bank Account Number (“IBAN”).

(2) The following information may be requested—

(a)the name of the account holder;

(b)where the account holder is an individual, the date of birth of the account holder;

(c)where the account holder is an individual, the address of the account holder;

(d)where the account holder is a firm, the address of its registered office and, if different, its principal place of business;

(e)the name of any person purporting to act on behalf of the account holder;

(f)the name and date of birth of any individual with a beneficial interest in the account or the account holder;

(g)the address of any individual with a beneficial interest in the account or the account holder;

(h)where a beneficial interest in the account holder is held by a firm, the name of that firm, the address of its registered office and, if different, its principal place of business;

(i)the IBAN of the account;

(j)any other number by which the individual account is identified by the credit institution (for example a roll number);

(k)the date of opening of the account;

(l)if the account has been closed, the date of closing; and

(m)any other numbers which are specific to an individual who is mentioned in sub-paragraphs (a) to (c) and (e) to (g) and which may be used to verify that individual’s identity (such as a passport or driving licence number) contained within any documents or information obtained by the credit institution to satisfy the customer due diligence requirements in regulations 28, 29 and 33 to 37.

Requests for information about safe-deposit boxesU.K.

45D.(1) A law enforcement authority or the Gambling Commission may make a request, using the central automated mechanism, to a provider of safe custody services for any of the information specified in this regulation in relation to a safe-deposit box held with that provider.

(2) The following information may be requested—

(a)the name of the customer to whom the safe-deposit box was or is made available;

(b)where the customer is an individual, their date of birth;

(c)where the customer is an individual, their address;

(d)where the customer is a firm, the address of its registered office and, if different, its principal place of business;

(e)the name of any person (except for employees of the provider of safe custody services) who the provider of safe custody services knows holds, or held, a key for the safe-deposit box, or has or has had access to the safe-deposit box in any other way;

(f)the date on which the safe-deposit box was made available to the customer and, if appropriate, ceased to be available; and

(g)any other numbers which are specific to an individual who is mentioned in sub-paragraphs (a) to (c) and (e) and which may be used to verify that individual’s identity (such as a passport or driving licence number) contained within any documents or information obtained by the provider of safe custody services to satisfy the customer due diligence requirements in regulations 28, 29 and 33 to 37.

Requirements for making a request for informationU.K.

45E.(1) The NCA, in carrying out its FIU functions, may request information under this Part for any purpose in connection with those functions.

(2) Subject to paragraph (1), a law enforcement authority may only request information under this Part for one or more of the following purposes—

(a)to investigate money laundering, terrorism (within the meaning of section 1 of the Terrorism Act 2000), or terrorist financing;

(b)to investigate whether property has been obtained through any conduct mentioned in sub-paragraph (a); or

(c)to carry out its supervisory functions (where the law enforcement authority also carries out a supervisory function).

(3) The Gambling Commission may only request information under this Part for the purpose of carrying out its supervisory functions.

(4) Only an appropriate officer of the Gambling Commission or the law enforcement authority may make a request under this Part on behalf of that authority or Commission.

(5) A request under this Part must not be made by a law enforcement authority (other than the NCA in carrying out its FIU functions) or the Gambling Commission unless the making of that request is first approved in writing by a senior officer of that authority or Commission.

(6) That senior officer must not approve the making of a request unless the officer is satisfied that the request complies with the requirements of this regulation and is proportionate to the purpose or purposes of the request.

(7) A senior officer must maintain a record in writing of any refusal to approve a request.

(8) Law enforcement authorities, and the Gambling Commission, may take into account any guidance which has been issued by the Treasury, or issued by an appropriate body or the NCA and approved by the Treasury, in relation to whom to designate as an appropriate officer or a senior officer.

Access to requests and responses, guidance and reviewU.K.

45F.(1) The NCA may access, using the central automated mechanism, all information or documents relating to requests and responses to requests made under this Part and may use the information or documents—

(a)in carrying out its FIU functions;

(b)for any of the purposes listed in regulation 45E(2);

(c)to prepare guidance under this Part;

(d)to provide anonymised information to the Secretary of State or the Treasury for the purposes of issuing guidance, preparing reports and making recommendations under this Part.

(2) The NCA must on request provide all or part of the information referred to in paragraph (1)(d) to the Secretary of State, the Treasury or an appropriate body approved by the Treasury.

(3) Credit institutions, providers of safe custody services, law enforcement authorities and the Gambling Commission may take into account any guidance which has been issued by the Treasury, or issued by an appropriate body or the NCA and approved by the Treasury, in relation to this Part.

(4) The Secretary of State must from time to time—

(a)carry out a review of the central automated mechanism; and

(b)publish a report setting out the conclusions of the review.

(5) The Secretary of State must publish the first report before the end of the first calendar year after the central automated mechanism is established.

(6) Subsequent reports must be published annually.

(7) A copy of the report must be laid before Parliament, and sent to—

(a)each law enforcement authority; and

(b)the Gambling Commission.

Record keepingU.K.

45G.(1) Each credit institution and provider of safe custody services must keep the records specified in paragraph (2) for a period of five years beginning with the date of the closure of the account or safe-deposit box.

(2) The records are a copy of any document or information needed in order to respond to a request made under this Part.

(3) Once the period referred to in paragraph (1) has expired, the credit institution or provider of safe custody services must delete any personal data retained for the purposes of these Regulations unless—

(a)the relevant person is required to retain records containing personal data—

(i)by or under any enactment, or

(ii)for the purposes of any court proceedings;

(b)the data subject has given consent to the retention of that data; or

(c)the relevant person has reasonable grounds for believing that records containing the personal data need to be retained for the purpose of legal proceedings.

InterpretationU.K.

45H.(1) For the purposes of this Part—

(a)an “appropriate officer” is an officer who has received appropriate training and who has been authorised in writing by a law enforcement authority or the Gambling Commission to make requests under this Part;

(b)a “senior officer” is an officer who has received appropriate training, who has sufficient knowledge of money laundering and terrorist financing, and who has been authorised in writing by a law enforcement authority or the Gambling Commission to authorise or refuse the making of requests under this Part;

(c)“credit union” means—

(i)in England, Wales and Scotland, a society which is registered as a credit union under the Co-operative and Community Benefit Societies Act 2014;

(ii)in Northern Ireland, a society which—

(aa)is registered as a credit union under the Credit Unions (Northern Ireland) Order 1985 and is an authorised person; or

(ab)is registered under the Co-operative and Community Benefit Societies Act (Northern Ireland) 1969 as a credit union and is an authorised person.

(d)“FIU functions” has the same meaning as in Schedule 6A (the United Kingdom’s Financial Intelligence Unit);

(e)“provider of safe custody services” means a credit institution or financial institution which makes available, within the United Kingdom, safe-deposit boxes to customers.]

PART 6U.K.Money Laundering and Terrorist Financing: Supervision and Registration

CHAPTER 1U.K.Duties of supervisory authorities

Duties of supervisory authoritiesU.K.

46.—(1) A supervisory authority must effectively monitor the relevant persons for which it is the supervisory authority (“its own sector”) and take necessary measures for the purpose of [F270

(a)securing compliance by such persons with the requirements of these Regulations; and

(b)securing that any application for which the supervisory authority grants approval under regulation 26 meets the requirements of regulation 26(7), whether or not the person making the application, or being approved, is a relevant person.]

(2) Each supervisory authority must—

(a)adopt a risk-based approach to the exercise of its supervisory functions, informed by the risk assessments carried out by the authority under regulation 17;

(b)ensure that its employees and officers have access both at its offices and elsewhere to relevant information on the domestic and international risks of money laundering and terrorist financing which affect its own sector;

(c)base the frequency and intensity of its on-site and off-site supervision on the risk profiles prepared under regulation 17(4);

(d)keep a record in writing of the actions it has taken in the course of its supervision, and of its reasons for deciding not to act in a particular case;

(e)take effective measures to encourage its own sector to report [F271actual or potential] breaches of the provisions of these Regulations to it;

[F272(f)provide one or more secure communication channels for persons to report actual or potential breaches of these Regulations to it;

(g)take reasonable measures to ensure that the identity of the reporting person is known only to the supervisory authority.]

(3) In determining its approach to the exercise of its supervisory functions the supervisory authority must—

F273(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)take account of the degree of discretion permitted to relevant persons in taking measures to counter money laundering and terrorist financing.

(4) In accordance with its risk-based approach, the supervisory authority must take appropriate measures to review—

(a)the risk assessments carried out by relevant persons under regulation 18;

(b)the adequacy of the policies, controls and procedures adopted by relevant persons under regulation 19 to 21 and 24, and the way in which those policies, controls and procedures have been implemented.

(5) A supervisory authority which, in the course of carrying out any of its supervisory functions or otherwise, knows or suspects, or has reasonable grounds for knowing or suspecting, that a person is or has engaged in money laundering or terrorist financing must as soon as practicable inform the NCA.

(6) A disclosure made under paragraph (5) is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(7) Where a disclosure under paragraph (5) is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by whom, or on whose behalf, it is made.

(8) The FCA, when carrying out its supervisory functions in relation to an auction platform—

(a)must effectively monitor the auction platform's compliance with—

(i)the customer due diligence requirements of [F274regulation 17 of the UK auctioning regulations];

(ii)the monitoring and record-keeping requirements of [F275regulation 37 of those Regulations]; and

(iii)the notification requirements of [F276regulation 38(4) and (5) of those Regulations]; and

(b)may monitor the auction platform's compliance with regulations 18 to 21 and 24 of these Regulations.

(9) The functions of the FCA under these Regulations shall be treated for the purposes of Parts 1, 2 and 4 of Schedule 1ZA to FSMA F277 (the Financial Conduct Authority) as functions conferred on the FCA under that Act.

F2772000 c 8. Schedule 1ZA was substituted, with Schedule 1ZB, for Schedule 1 to the Financial Services and Markets Act by section 6(2) of the Financial Services Act 2012 (c.21), and amended by paragraphs 14 and 16 of Schedule 3 and paragraph 7 of Schedule 8 to the Financial Services (Banking Reform) Act 2013 (c.33), paragraph 13 of Schedule 3 to the Pension Scheme Act 2015 (c.8), section 18 of the Bank of England and Financial Services Act 2016 (c.14) and S.I. 2013/1388.

[F278Annual reports by self-regulatory organisationsU.K.

46A.  A self-regulatory organisation must publish or make arrangements to publish an annual report containing information about—

(a)measures taken by the self-regulatory organisation to encourage the reporting of actual or potential breaches as referred to in regulation 46(2)(e);

(b)the number of reports of actual or potential breaches received by that self-regulatory organisation as referred to in regulation 46(2)(e);

(c)the number and description of measures carried out by the self-regulatory organisation to monitor, and enforce, compliance by relevant persons with their obligations under—

(i)Part 3 (customer due diligence);

(ii)Part 3 of the Terrorism Act 2000 (terrorist property) F279 and Part 7 of the Proceeds of Crime Act 2002 (money laundering) F280;

(iii)regulation 40 (record-keeping); and

(iv)regulations 20 to 24 (policies and controls etc.).]

Duties of supervisory authorities: informationU.K.

47.—(1) A supervisory authority must, in any way it considers appropriate, make up-to-date information on money laundering and terrorist financing available to those relevant persons which it supervises (“its own sector”).

(2) The information referred to in paragraph (1) must include the following—

(a)information on the money laundering and terrorist financing practices considered by the supervisory authority to apply to its own sector;

(b)a description of indications which may suggest that a transfer of criminal funds is taking place in its own sector;

(c)a description of the circumstances in which the supervisory authority considers that there is a high risk of money laundering or terrorist financing.

(3) The information referred to in paragraph (1) must also include information from the following sources which the supervisory authority considers is relevant to its own sector—

F281(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F281(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F281(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F281(d). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F281(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)the report prepared by the Treasury and the Home Office under regulation 16(6);

(g)any relevant information made available by the Treasury and the Home Office under regulation 16(8);

(h)any relevant information published by the Director General of the NCA under section 4(9) (operations) or 6 (duty to publish information) of the Crime and Courts Act 2013 F282.

Duties of the FCA: guidance on politically exposed personsU.K.

48.—(1) The FCA must give guidance under section 139A of FSMA (power of the FCA to give guidance) F283 to relevant persons, who are subject to rules made by the FCA, in relation to the enhanced customer due diligence measures required under regulation 35 in respect of politically exposed persons (“PEPs”), their family members and known close associates (within the meanings given in regulation 35(12)).

(2) The guidance referred to in paragraph (1) must include guidance on the following matters—

(a)taking into account regulation 35(14), what functions are, and are not, to be taken to be “prominent public functions” for the purposes of determining whether an individual is a PEP;

(b)which persons should be treated as coming within the definitions of—

(i)a family member of a PEP; or

(ii)a known close associate of a PEP;

(c)what constitutes “appropriate risk-management systems and procedures” for the purposes of regulation 35(1);

(d)what account is to be taken of the jurisdiction in which the prominent public function arises (taking into consideration the controls against money-laundering and terrorist financing in different jurisdictions);

(e)how the level of risk associated with a particular individual is to be assessed for the purposes of regulation 35(3), and what approach is to be taken in relation to a PEP, or a family member or known close associate of a PEP, if the PEP, family member or close associate is assessed as presenting a low level of risk;

(f)who should be treated as coming within the meaning of “senior management” for the purposes of regulation 35(5) and (8);

(g)the situations in which it would be appropriate for the senior management approval mentioned in regulation 35(5) to be given by an individual who is not a member of the board of directors (or, if there is no such board, a member of the equivalent management body) of a business;

(h)what constitutes “adequate measures” and “reasonable measures” for the purposes of paragraphs (5) and (6) respectively of regulation 35;

(i)the extent to which information on public registers may be taken into account for the purposes of regulation 35(5) and (6);

(j)what sort of monitoring and scrutiny is required for the purposes of regulation 35(5) and (8);

(k)what measures are required in relation to persons who have ceased to be PEPs to comply with regulation 35(9); and

(l)how to address risks of money laundering or terrorist financing where a PEP, a family member of a PEP or a known close associate of a PEP, is—

(i)the beneficial owner of a customer;

(ii)a beneficiary of a contract of long-term insurance;

(iii)the beneficial owner of a beneficiary of a contract of long-term insurance.

F2832000 c.8. Section 139A was substituted (together with the rest of Part 9A of FSMA) for the original Part 10 by section 24 of the Financial Services Act 2012 (c.21).

Duties of self-regulatory organisationsU.K.

49.—(1) Self-regulatory organisations must make arrangements to ensure that—

(a)their supervisory functions are exercised independently of any of their other functions which do not relate to disciplinary matters;

(b)sensitive information relating to the supervisory functions is appropriately handled within the organisation;

(c)they employ only persons with appropriate qualifications, integrity and professional skills to carry out the supervisory functions;

(d)contravention of a relevant requirement by a relevant person they are responsible for supervising renders that person liable to effective, proportionate and dissuasive disciplinary measures under their rules;

[F284(e)potential conflicts of interest within the organisation are appropriately handled.]

(2) Self-regulatory organisations must—

(a)provide adequate resources to carry out the supervisory functions;

(b)appoint a person to monitor and manage the organisation's compliance with its duties under these Regulations.

(3) The person appointed under paragraph (2)(b) is to be responsible—

(a)for liaison with—

(i)another supervisory authority or a registering authority (within the meaning of regulation 53);

(ii)any law enforcement authority; and

(iii)any overseas authority (within the meaning of regulation 50(4))

(b)for ensuring that the self-regulatory organisation responds fully and rapidly to any request from an authority referred to in paragraph (a)(i) or (ii) for information about any person it supervises, whether that request concerns an application by that person for registration or any other matter.

Duty to co-operateU.K.

50.—(1) A supervisory authority must take such steps as it considers appropriate—

(a)to co-operate with other supervisory authorities, the Treasury and law enforcement authorities in relation to the development and implementation of policies to counter money laundering and terrorist financing;

(b)to co-ordinate activities to counter money laundering and terrorist financing with other supervisory authorities and law enforcement authorities;

F285(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F286(1A) A supervisory authority may take such steps as it considers appropriate to co-operate with overseas authorities—

(a)for the purposes of these Regulations, and

(b)to ensure the effective supervision of a relevant person to which paragraph (2) applies.]

(2) This paragraph applies to a relevant person established—

(a)in the United Kingdom, which has its head office in another country; or

(b)in another country but which has its head office in the United Kingdom.

(3) Co-operation may include the sharing of information which the supervisory authority is not prevented from disclosing [F287, provided that—

(a)any confidential information disclosed to the authority in question will be subject to an obligation of confidentiality equivalent to that provided for in regulation 52A;

(b)where the information disclosed has been received from [F288a third country], it is only disclosed—

(i)with the express consent of the competent authority or other institution which provided the information; and

(ii)where appropriate, for the purposes for which the information was originally provided.]

(4) For the purposes of this regulation “overseas authority” means—

(a)an authority responsible for any of the functions provided for in the fourth money laundering directive in an EEA state F289... in which the relevant person is established or has its head office; and

(b)where the relevant person is established or has its head office in [F290another country] which is not an EEA state, an authority in that country which has equivalent functions to any of the functions provided for in the fourth money laundering directive.

F291(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Regulatory informationU.K.

51.—(1) A supervisory authority within regulation 7 must collect such information as it considers necessary for the purpose of performing its supervisory functions, including the information specified in Schedule 4.

(2) A supervisory authority within regulation 7 must on request provide the Treasury with such information collected under paragraph (1) as may be specified by the Treasury, for the purpose of enabling the Treasury to [F292perform its functions under these Regulations].

[F293(2A) The Treasury may disclose to the FCA information provided by the supervisory authorities under paragraph (2), provided that the disclosure is made for purposes connected with the effective exercise of—

(a)the functions of the Treasury under these Regulations in relation to self-regulatory organisations or under the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 F294 (“the Professional Body Regulations”); or

(b)the functions of the FCA under the Professional Body Regulations.]

(3) The Treasury must publish an annual consolidated review of the information provided by the supervisory authorities under paragraph (2).

(4) A disclosure made under paragraph (2) [F295or (2A)] is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(5) Where a disclosure under paragraph (2) [F296or (2A)] is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by whom, or on whose behalf, it is made.

Disclosure by supervisory authoritiesU.K.

52.—(1) [F297Subject to regulation 52A,] a supervisory authority may disclose to a relevant authority information it holds relevant to its supervisory functions, provided the disclosure is made for purposes connected with the effective exercise of—

(a)the functions of the relevant authority under these Regulations;

(b)the functions of the law enforcement authority; or

(c)in the case of an overseas authority, the functions provided for in the fourth money laundering directive, or equivalent functions.

(2) Information disclosed to a relevant authority under paragraph (1) may not be further disclosed by that authority, except—

(a)in accordance with paragraph (1);

(b)by the FCA to the PRA, where the information concerns a PRA-authorised person or a person who has a qualifying relationship with a PRA-authorised person;

(c)in the case of an overseas authority, in accordance with any conditions imposed on further disclosure of that information by the supervisory authority which disclosed that information to the overseas authority;

(d)with a view to the institution of, or otherwise for the purposes of, any criminal or other enforcement proceedings; or

(e)as otherwise required by law.

(3) A disclosure made under paragraph (1) is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(4) Where a disclosure under paragraph (1) is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by whom, or on whose behalf, it is made.

(5) For the purposes of this regulation, “relevant authority” means—

(a)another supervisory authority;

(b)the Treasury;

(c)any law enforcement authority;

(d)an overseas authority, within the meaning of regulation 50(4).

[F298Obligation of confidentialityU.K.

52A.(1) No person working for a relevant supervisory authority, or acting on behalf of a relevant supervisory authority (or who has worked or acted for a relevant supervisory authority) may, except in accordance with this regulation, disclose any confidential information received in the course of their duties under these Regulations.

(2) Information referred to in paragraph (1) may be disclosed in summary or aggregate form, provided that no credit institution or financial institution is identifiable from the information disclosed.

(3) A relevant supervisory authority may only use confidential information received pursuant to these Regulations—

(a)in the discharge of its duties under these Regulations or under other legislation relating to—

(i)money laundering or terrorist financing;

(ii)prudential regulation; or

(iii)the supervision of credit institutions and financial institutions;

(b)in an appeal against a decision of a supervisory authority;

(c)in court proceedings initiated by a relevant supervisory authority in the exercise of the duties referred to in sub-paragraph (a), or otherwise relating to the authority’s discharge of those duties;

[F299(d)where the Commissioners are the supervisory authority, in accordance with sections 17 and 18 of the Commissioners for Revenue and Customs Act 2005.]

(4) This regulation does not prevent the exchange of information between—

(a)any authority in the United Kingdom responsible for the supervision of a credit institution or a financial institution in accordance with these Regulations or other law relating to credit institutions or financial institutions (a “UK authority”) and another UK authority;

[F300(b)a UK authority and a competent authority in a third country supervising any credit or financial institution in accordance with—

(i)the fourth money laundering directive or other legislative acts relating to credit institutions or financial institutions;

(ii)laws imposing requirements on credit institutions or financial institutions which have an equivalent effect to those laid down in the fourth money laundering directive.]

(5) Confidential information may only be exchanged under paragraph (4) if the authority to which the information is provided agrees to hold it subject to an obligation of confidentiality equivalent to that set out in paragraph (1).

(6) Nothing in this regulation affects the disclosure of confidential information in accordance with regulations made under section 349 (exceptions from section 348) of FSMA F301.

(7) For the purposes of this regulation, a “relevant supervisory authority” is a supervisory authority which is responsible for the supervision of credit institutions or financial institutions.

Obligation of confidentiality: offenceU.K.

52B.(1) Any person who discloses information in contravention of regulation 52A is guilty of an offence.

(2) A person guilty of an offence under paragraph (1) is liable—

(a)on summary conviction—

(i)in England and Wales, to imprisonment for a term not exceeding three months, to a fine or to both,

(ii)in Scotland or Northern Ireland, to imprisonment for a term not exceeding three months, to a fine not exceeding the statutory maximum or to both;

(b)on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine or to both.

(3) In proceedings for an offence under this regulation, it is a defence for the accused to prove—

(a)that the accused did not know and had no reason to suspect that the information was confidential information; and

(b)that the accused took all reasonable precautions and exercised all due diligence to avoid committing the offence.]

CHAPTER 2U.K.Registration

InterpretationU.K.

53.  For the purposes of this Chapter—

registering authority” means—

(a)

the FCA, in relation to—

(i)

those relevant persons which it is required to register under regulation 54(1) [F302or (1A)]; and

(ii)

those relevant persons it decides to register under regulation 55(1);

(b)

the Commissioners, in relation to—

(i)

those relevant persons which they are required to register under regulation 54(2); and

(ii)

those relevant persons they decide to register under regulation 55(3);

telecommunication, digital and IT payment service provider” means an undertaking which provides payment services [F303consisting of the execution of payment transactions where the consent of the payer to execute a payment transaction is given by means of any telecommunication, digital or IT device and the payment is made to the telecommunication, IT system or network operator acting only as an intermediary between the payment service user and the supplier of the goods and services (and terms used in this definition which are defined in the Payment Services Regulations 2017 have the meanings given in those Regulations).]

Duty to maintain registers of certain relevant personsU.K.

54.—(1) The FCA must maintain a register of those relevant persons who—

(a)are authorised persons, and

(b)have notified the FCA under regulation 23 that they are acting, or intend to act, as a money service business or a trust or company service provider.

[F304(1A) The FCA must maintain a register of—

(a)cryptoasset exchange providers; and

(b)custodian wallet providers.]

(2) The Commissioners must maintain a register of those relevant persons who are not included in the register maintained by the FCA under paragraph (1) and are—

(a)high value dealers;

(b)money service businesses;

(c)trust or company service providers;

(d)bill payment service providers, for which the Commissioners are the supervisory authority;

(e)telecommunication, digital and IT payment service providers, for which the Commissioners are the supervisory authority.

(3) Subject to paragraph (4) the registering authorities may keep the registers required by this regulation in any form they think fit.

(4) The register maintained by the Commissioners must include entries in the registers maintained under regulation 25 of the Money Laundering Regulations 2007 F280 which were current immediately before the date that regulation was revoked.

(5) A registering authority may publish or make available to public inspection all or part of a register maintained by it under this regulation.

Power to maintain registersU.K.

55.—(1) The FCA may maintain a register of Annex 1 financial institutions.

(2) For the purposes of paragraph (1), an “Annex 1 financial institution” is a financial institution which—

(a)falls within regulation 10(2)(a), and

(b)is not—

(i)a money service business;

(ii)an authorised person;

(iii)a bill payment service provider; or

(iv)a telecommunication, digital and IT payment service provider.

(3) The Commissioners may maintain registers of relevant persons who are not supervised by any of the professional bodies listed in Schedule 1, and who are—

(a)estate agents,

(b)auditors;

(c)external accountants;

(d)tax advisers;

(e)bill payment service providers; F305...

(f)telecommunication, digital and IT payment service providers;

[F306(g)letting agents; or

(h)art market participants.]

(4) Where a registering authority decides to maintain a register under this regulation, it must take reasonable steps to bring its decision to the attention of those relevant persons in respect of which the register is to be established.

(5) Subject to paragraph (6) a registering authority may maintain a register under this regulation in any form it thinks fit.

(6) The registers maintained by the registering authorities must include entries in any equivalent registers maintained under regulation 32 of the Money Laundering Regulations 2007 F301 which were current immediately before the date that regulation was revoked.

(7) A registering authority may publish or make available to public inspection all or part of a register maintained by it under this regulation.

F301 2000 c. 8. Section 349 has been amended by section 964 of the Companies Act 2006 (c.46), paragraph 19 of Schedule 12 to the Financial Services Act 2012 (c.21) and by S.I. 2006/1183 and 2007/1093.

Requirement to be registeredU.K.

56.—(1) Unless a person in respect of whom the registering authorities are required to maintain a register under regulation 54 is included in the appropriate register, or paragraph (2) [F307or regulation 56A (transitional provision for existing cryptoasset businesses)] applies, that person must not act as a—

(a)high value dealer;

(b)money service business;

(c)trust or company service provider;

(d)bill payment service provider; F308...

(e)telecommunication, digital and IT payment service provider;

[F309(f)cryptoasset exchange provider; or

(g)custodian wallet provider.]

[F310(2) This paragraph applies if—

(a)the person concerned is a high value dealer, a bill payment service provider, or a telecommunications, digital and IT payment service provider and has applied for registration in the register but that application has not yet been determined; or

(b)the person concerned is a money service business or a trust or company service provider and has, before 10th January 2020, applied for registration in the register but that application has not yet been determined.]

(3) A relevant person which is registered in the register maintained by the Commissioners under regulation 25 or 32 of the Money Laundering Regulations 2007 F294 is to be treated as included in the appropriate registers maintained by the Commissioners under regulation 54 or 55 of these Regulations for the purpose of paragraph (1)—

(a)during the period of 12 months beginning with the date on which these Regulations come into force, and

(b)after that period, if the person concerned has provided the additional information required for registration under regulation 57 within the period referred to in sub-paragraph (a).

(4) A relevant person which is registered in the register maintained by the FCA under regulation 32 of the Money Laundering Regulations 2007 is to be treated as included in the register maintained by the FCA under regulation 55(1) for the purposes of paragraph (1).

(5) Where a registering authority decides to maintain a register under regulation 55(1) or (3) in respect of any description of relevant persons and establishes a register for that purpose, [F311or where a new description of relevant persons is required to be registered in consequence of an amendment to these Regulations,] a relevant person of that description must not carry on the business or profession in question for a period of more than 12 months beginning with the date on which the registering authority establishes the register [F312or (as the case may be) the date on which the amendment comes into force] unless—

(a)that person is included in the register, F313...

(b)that person has applied for registration in the register, but that application has not yet been determined, [F314or

(c)that person is an art market participant or a letting agent.]

[F315(6) An art market participant or a letting agent—

(a)must apply for registration in the register before 10th June 2021;

(b)must not carry on that business or profession on or after 10th June 2021 unless—

(i)that person is included in the register, or

(ii)that person has applied for registration in the register, but the application has not yet been determined.]

[F316Transitional provision for existing cryptoasset businesses: requirement to registerU.K.

56A.(1) Regulation 56 does not apply to an existing cryptoasset exchange provider or existing custodian wallet provider until—

(a)the date the person is included in the register maintained under regulation 54(1A) following the determination of its application by the FCA;

(b)where the FCA gives the person notice under regulation 59(4)(b) of the FCA’s decision not to register that person—

(i)the date on which the FCA states that the decision takes effect, or

(ii)if the FCA considers that the interests of the public require its decision to have immediate effect, the date on which the FCA gives a notice to the person which includes a statement to that effect and the reasons for it; or

(c)10th January 2021 if before that date neither of the following has occurred—

(i)the giving of notice to that person by the FCA under regulation 59(3);

(ii)the expiry of the period specified in regulation 59(3A) for the FCA to give such notice.

(2) In this regulation, “existing cryptoasset exchange provider” and “existing custodian wallet provider” mean a cryptoasset exchange provider or custodian wallet provider which was carrying on business as a cryptoasset exchange provider or custodian wallet provider (as the case may be) in the United Kingdom immediately before 10th January 2020.]

Applications for registration in a register maintained under regulation 54 or 55U.K.

57.—(1) A person applying for registration in a register maintained under regulation 54 or 55 (“an applicant”) must make an application in such manner and provide such information as the registering authority may specify.

(2) The information which the registering authority may specify includes, among other things—

(a)the applicant's full name and where different the name of the business;

(b)where the applicant is an individual, the applicant's date of birth and residential address;

(c)the nature of the business;

(d)the address of the head office of the business with its company number (in the case of a company), and of any branches the business has in the United Kingdom;

(e)the full name of the nominated officer (if any);

(f)a risk assessment which satisfies the requirements in regulation 18;

(g)information as to the way in which the business meets the requirements set out in—

(i)these Regulations;

(ii)Part 3 of the Terrorism Act 2000 (terrorist property) F317;

(iii)Part 7 of the Proceeds of Crime Act 2002 (money laundering) F318; and

(iv)Part 8 of the Proceeds of Crime Act 2002 (investigations);

(h)in relation to a money service business or a trust or company service provider—

(i)the full name, date of birth and residential address of any officer, manager or beneficial owner of the business or service provider; and

(ii)information needed by the registering authority to decide whether it must refuse the application pursuant to regulation 58;

(i)in relation to a money service business, the full name and address of any agent it uses for the purposes of its business;

(j)where the registering authority is not the supervisory authority for the applicant—

(i)the name of the applicant's supervisory authority;

(ii)confirmation from the applicant's supervisory authority that any person mentioned in regulation 58(1) is a fit and proper person within the meaning of that regulation;

(k)whether the applicant, or any person named in the application, has been convicted of a criminal offence listed in Schedule 3.

(3) At any time after receiving an application and before determining it, the registering authority may require the applicant to provide, within 21 days beginning with the date on which the requirement is issued, such further information as the registering authority reasonably considers necessary to enable it to determine the application.

(4) If at any time after the applicant has provided the registering authority with any information under paragraph (1) or (3) (whether before or after the applicant is registered)—

(a)there is a material change affecting any matter contained in that information; or

(b)it becomes apparent to the applicant that the information contains an inaccuracy,

the applicant must provide the registering authority with details of the change or a correction of the inaccuracy within 30 days beginning with the date of the occurrence of the change (or the discovery of the inaccuracy) or within such later time as may be agreed with the registering authority.

(5) The obligation in paragraph (4) applies also to material changes or inaccuracies affecting any matter contained in any supplementary information provided pursuant to that paragraph.

(6) Any information to be provided to the registering authority under this regulation must be in such form and verified in such manner as the authority may specify.

Fit and proper testU.K.

58.—(1) The registering authority must refuse to register an applicant for registration in a register maintained under regulation 54 as a money service business or as a trust or company service provider, if it is satisfied that—

(a)the applicant;

(b)an officer or manager of the applicant;

(c)a beneficial owner of the applicant; or

(d)where the applicant is a money service business—

(i)any agent used by the applicant for the purposes of its business; or

(ii)any officer, manager or beneficial owner of the agent,

is not a fit and proper person to carry on that business.

(2) Where the FCA has decided to maintain a register of Annex I financial institutions under regulation 55, paragraph (1) applies in relation to those institutions as it applies to a money service business and a trust or company service provider.

(3) A person who has been convicted of a criminal offence listed in Schedule 3 is to be treated as not being a fit and proper person to carry on the business for the purposes of paragraph (1).

(4) If paragraph (3) does not apply, the registering authority must have regard to the following factors in determining the question in paragraph (1)—

(a)whether the applicant has consistently failed to comply with the requirements of—

(i)these Regulations;

(ii)the Money Laundering Regulations 2001 F319,

(iii)the Money Laundering Regulations 2003 F320, or

(iv)the Money Laundering Regulations 2007 F321; F322...

(b)the risk that the applicant's business may be used for money laundering or terrorist financing; [F323and

(c)whether the applicant, and any officer, manager or beneficial owner of the applicant, has adequate skills and experience and has acted and may be expected to act with probity.]

(5) Where the applicant is a money service business, the registering authority may, in determining the question in paragraph (1), take account of the opinion of the applicant as to whether any person referred to in paragraph (1)(d) is a fit and proper person to carry on the business.

(6) Where the registering authority is not the supervisory authority of the applicant, the registering authority must consult the supervisory authority and may rely on its opinion as to whether or not the applicant is a fit and proper person to carry on the business referred to in paragraph (1).

[F324Fit and proper test: cryptoasset businessesU.K.

58A.(1) The FCA must refuse to register an applicant (“A”) for registration in a register maintained under regulation 54(1A) as a cryptoasset exchange provider or as a custodian wallet provider if A does not meet the requirement in paragraph (2).

(2) A, and any officer, manager or beneficial owner of A, must be a fit and proper person to carry on the business of a cryptoasset exchange provider or custodian wallet provider, as the case may be.

(3) A person who has been convicted of a criminal offence listed in Schedule 3 is to be treated as not being a fit and proper person for the purposes of this regulation.

(4) If paragraph (3) does not apply, the FCA must have regard to the following factors in determining whether the requirement in paragraph (2) is met—

(a)whether A has consistently failed to comply with the requirements of these Regulations;

(b)the risk that A’s business may be used for money laundering or terrorist financing; and

(c)whether A, and any officer, manager or beneficial owner of A, has adequate skills and experience and has acted and may be expected to act with probity.]

Determination of applications for registration under regulations 54 and 55U.K.

59.—(1) Subject to regulation 58 [F325and regulation 58A], the registering authority may refuse to register an applicant for registration in a register maintained under regulation 54 or 55 if—

(a)any requirement of, or imposed under, regulation 57 has not been complied with;

(b)it appears to the registering authority that any information provided pursuant to regulation 57 is false or misleading in a material particular;

(c)the applicant has failed to pay—

(i)a penalty imposed by the authority under Part 9;

(ii)a charge imposed by the authority under Part 11; or

(iii)a penalty or charge imposed by the authority under regulation 35(1) or 42(1) of the Money Laundering Regulations 2007;

(d)where the registering authority is not the applicant's supervisory authority, the supervisory authority opposes the application for registration on reasonable grounds; or

(e)the registering authority suspects, on reasonable grounds—

(i)that the applicant will fail to comply with any of its obligations under—

(aa)these Regulations;

(bb)Part 3 of the Terrorism Act 2000 F326; or

(cc)Parts 7 and 8 of the Proceeds of Crime Act 2002 F327;

(the “relevant obligations”);

(ii)that any person whom the applicant has identified as one of its officers or managers will fail to comply with any of the relevant obligations.

(2) Where the Commissioners are the registering authority, they must within 45 days beginning either with the date on which they receive the application or, where applicable, with the date on which they receive any further information required under regulation 57(3), give the applicant notice of—

(a)the decision to register the applicant; or

(b)the following matters—

(i)their decision not to register the applicant;

(ii)the reasons for their decision;

(iii)the right to a review under regulation 94; and

(iv)the right to appeal under regulation 99.

(3) Where the FCA is the registering authority, it must within [F328the period specified in paragraph (3A)], give the applicant notice of—

(a)its decision to register the applicant; or

(b)the following matters—

(i)that it is minded not to register the applicant;

(ii)the reasons for being minded to refuse to register the applicant; and

(iii)the right to make representations to it within a specified period (which may not be less than 28 days).

[F329(3A) The period specified in this paragraph is—

(i)where the applicant is a cryptoasset exchange provider or custodian wallet provider, 3 months, or

(ii)in any other case, 45 days,

beginning either with the date on which it receives the application or, where applicable, with the date on which it receives any further information required under regulation 57(3).]

(4) After the expiry of the period referred to in paragraph (3)(b)(iii), the FCA must decide, within a reasonable period, whether to register the applicant and it must give the applicant notice of—

(a)its decision to register the applicant; or

(b)the following matters—

(i)its decision not to register the applicant;

(ii)the reasons for its decision; and

(iii)the right to appeal under regulation 93.

(5) The registering authority must, as soon as practicable after deciding to register a person, include that person in the relevant register.

Cancellation and suspension of registration in a register under regulation 54 or 55U.K.

60.—(1) If paragraph (2) applies, the registering authority may suspend (for such period as it considers appropriate) or cancel—

(a)the registration of a money service business or a trust or company service provider in a register maintained under regulation 54; or

(b)the registration of an Annex 1 financial institution in a register maintained under regulation 55 (including the registration of an Annex 1 financial institution previously included in a register maintained under regulation 32 of the Money Laundering Regulations 2007) F330.

(2) This paragraph applies if, at any time after registration, the registering authority is satisfied that—

(a)the money service business, trust or company service provider, or Annex 1 financial institution (as the case may be); or

(b)any other person mentioned in regulation 58(1) in relation to that business, provider, or financial institution,

is not a fit and proper person for the purposes of regulation 58.

[F331(2A) The FCA may suspend (for such period as it considers appropriate) or cancel the registration of a cryptoasset exchange provider or custodian wallet provider if, at any time after registration, the FCA is satisfied that the cryptoasset exchange provider or custodian wallet provider (as the case may be) does not meet the requirement in regulation 58A(2).]

(3) The registering authority may suspend (for such period as it considers appropriate) or cancel a person's registration in a register maintained by it under regulation 54 or 55 if, at any time after registration—

(a)it appears to the authority that any of paragraphs (a) to (e) of regulation 59(1) apply; or

(b)the person has failed to comply with any requirement of a notice given under regulation 66.

(4) The Commissioners may suspend (for such period as they consider appropriate) or cancel the registration of a person who—

(a)was included in a register maintained by the Commissioners under regulation 25 or 32 of the Money Laundering Regulations 2007, and

(b)has not provided the additional information required for registration under regulation 57 within the period of 12 months beginning with the date on which these Regulations come into force.

(5) The Commissioners may suspend (for such period as they consider appropriate) or cancel the registration of a money service business in a register maintained under regulation 54(2)(b) where the money service business is—

(a)providing a payment service in the United Kingdom, or is purporting to do so;

(b)not included in the register of payment service providers maintained by the FCA under regulation 4(1) of the Payment Service Regulations [F3322017]; and

(c)not a person—

(i)mentioned in paragraphs [F333(d) to (j)] of the definition of a “payment service provider” in regulation 2(1) of the Payment Services Regulations [F3342017], or

(ii)to whom regulation 3 or [F335154(2)] of those Regulations applies.

(6) Where the supervisory authority of a person on the register maintained under regulation 54 or 55 is not the registering authority, the supervisory authority must inform the registering authority as soon as possible if it becomes aware of any grounds on which the registering authority might decide to suspend or cancel that person's registration.

(7) Where the Commissioners decide to suspend or cancel a person's registration they must give that person notice of—

(a)their decision and, subject to paragraph (10), the date from which the suspension or cancellation takes effect;

(b)if appropriate, the period of the suspension;

(c)the reasons for their decision;

(d)the right to a review under regulation 94; and

(e)the right to appeal under regulation 99.

(8) Where the FCA is minded to suspend or cancel a person's registration it must give that person notice—

(a)that it is so minded;

(b)if appropriate, the proposed period of the suspension;

(c)the reasons for being so minded; and

(d)the right to make representations to it within the period specified in the notice (which must not be less than 28 days).

(9) The FCA must then decide, within a reasonable period, whether to suspend or cancel the person's registration and it must give that person notice of—

(a)its decision not to suspend or cancel the person's registration; or

(b)the following matters—

(i)its decision to suspend or cancel the person's registration and, subject to paragraph (10), the date from which the suspension or cancellation takes effect;

(ii)the period of the suspension;

(iii)the reasons for its decision; and

(iv)the right to appeal under regulation 93.

(10) If the registering authority—

(a)considers that the interests of the public require the suspension or cancellation of a person's registration to have immediate effect; and

(b)includes a statement to that effect and the reasons for it in the notice given under paragraph (7) or (9),

the suspension or cancellation takes effect when the notice is given to the person.

[F336(11) Where the registering authority decides to suspend or cancel a person’s registration, the authority may, if it considers it proportionate to do so, publish such information about that decision as the authority considers appropriate.

(12) Where the supervisory authority publishes information under paragraph (11) and the person whose registration is suspended or cancelled refers the matter to the Upper Tribunal, the supervisory authority must, without delay, publish information about the status of the appeal and its outcome in the same manner as that in which the information was published under paragraph (11).]

[F337CHAPTER 3U.K.Disclosure obligation

Disclosure by cryptoasset businessesU.K.

60A.(1) Paragraph (2) applies where—

(a)a cryptoasset exchange provider or custodian wallet provider (“cryptoasset business”) establishes a business relationship, or enters into a transaction, with a customer that arises out of any of its activities as a cryptoasset business, and

(b)the activity is not—

(i)within scope of the jurisdiction of the Financial Ombudsman Service, or

(ii)subject to protection under the Financial Services Compensation Scheme, or

(iii)within scope of the jurisdiction of, or subject to protection under, either of the schemes referred to in paragraph (i) or (ii).

(2) Before establishing the business relationship or entering into the transaction, the cryptoasset business must inform the customer of the position in paragraph (1)(b)(i), (ii) or (iii), as the case may be.

(3) In this regulation—

(a)the Financial Ombudsman Service means the scheme established under Part 16 of FSMA F338;

(b)the Financial Services Compensation Scheme means the scheme established under Part 15 of FSMA F339.]

F338Section 226 was amended by the Financial Services Act 2012 (c.21), section 39 and Schedule 11 and by S.I. 2009/209, 2011/99, 2017/692 and 2017/752. Section 227 was amended by the Consumer Credit Act 2006 (c.14), section 61; the Financial Services Act 2012, section 39 and Schedule 11 and by S.I. 2013/1881.

F339Section 212 was amended by the Financial Services Act 2012 (c.21), section 38 and Schedule 10, and by the Financial Services (Banking Reform) Act 2013 (c.33), section 16. Section 213 was amended by the Financial Services Act 2012, section 38 and Schedule 10, and by S.I. 2017/701. Section 214 was amended by the Financial Services Act 2012, section 38 and Schedule 10, and by the Banking Act 2009 (c.1), sections 169 and 174, and by S.I. 2017/701.

PART 7 U.K.Transfer of Funds (Information on the Payer) Regulations

InterpretationU.K.

61.  In this Part “transfer of funds supervisory authority” in relation to a payment service provider means the supervisory authority specified by regulation 62.

Transfer of funds supervisory authoritiesU.K.

62.—(1) The FCA is the transfer of funds supervisory authority for payment service providers, who are—

(a)authorised persons;

(b)authorised payment institutions under the Payment Services Regulations [F3402017] which are not included in the register maintained by the Commissioners under regulation 54(2);

(c)registered small payment institutions under the Payment Services Regulations [F3412017] which are not included in the register maintained by the Commissioners under regulation 54(2);

(d)authorised electronic money institutions under the Electronic Money Regulations 2011 F342; or

(e)registered small electronic money institutions under the Electronic Money Regulations 2011.

(2) The Commissioners are the transfer of funds supervisory authority for payment service providers who do not come within paragraph (1).

Duties of transfer of funds supervisory authoritiesU.K.

63.—(1) A transfer of funds supervisory authority must—

(a)monitor effectively the payment service providers for whom it is the transfer of funds supervisory authority;

(b)take the measures necessary to secure compliance by payment service providers with the requirements of the funds transfer regulation;

(c)take effective measures to encourage the payment service provider to report breaches of the provisions of the funds transfer regulation to the authority;

(d)take such steps as it considers appropriate—

(i)to co-operate with other supervisory authorities, the Treasury and law enforcement authorities in relation to the development and implementation of policies to counter money laundering and terrorist financing;

(ii)to co-ordinate activities to counter money laundering and terrorist financing;

(iii)to co-operate with overseas authorities to ensure the effective supervision of a payment service provider to which paragraph (2) applies.

(2) This paragraph applies to a payment service provider established—

(a)in the United Kingdom, which has its head office in another country; or

(b)in another country but which has its head office in the United Kingdom.

(3) Co-operation may include the sharing of information which the supervisory authority is not prevented from disclosing.

F343(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5) A transfer of funds supervisory authority which, in the course of carrying out any of its functions under this Part or otherwise, knows or suspects, or has reasonable grounds for knowing or suspecting, that a payment service provider is or has engaged in money laundering or terrorist financing must as soon as practicable inform the NCA.

(6) A disclosure made under paragraph (5) is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(7) Where a disclosure under paragraph (5) is made in good faith, no civil liability arises in respect of the disclosure on the part of the person by whom, or or on whose behalf, it is made.

(8) The functions of the FCA under this Part are to be treated for the purposes of section 1A of, and Parts 1, 2 and 4 of Schedule 1ZA to, FSMA (the Financial Conduct Authority) F344 as functions conferred on the FCA under that Act.

F345(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(10) For the purposes of this regulation, “overseas authority” means—

(a)an authority responsible for any of the functions provided for in the funds transfer regulation in an EEA state F346... in which the payment service provider is established or has its head office; and

(b)where the payment service provider is established or has its head office in [F347another country] which is not an EEA state, an authority in that country which has equivalent functions to any of the functions provided for in the funds transfer regulation.

F3442000 c.8. Section 1A was substituted, together with the rest of Part 1A for Part 1 of the Financial Services and Markets Act 2000 by section 6(1) of the Financial Services Act 2012 (c.21). Schedule 1ZA was substituted, with Schedule 1ZB, for Schedule 1 to the Financial Services and Markets Act by section 6(2) of the Financial Services Act 2012 (c.21), and amended by paragraphs 14 and 16 of Schedule 3 and paragraph 7 of Schedule 8 to the Financial Services (Banking Reform) Act 2013 (c.33), paragraph 13 of Schedule 3 to the Pension Scheme Act 2015 (c.8) section 18 of the Bank of England and Financial Services Act 2016 (c.14) and S.I. 2013/1388.

Obligations of payment service providersU.K.

64.F348(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) A payment service provider must ensure that it is able F349... to respond fully and rapidly to enquiries from a person specified in paragraph (3) concerning any of the information required by or under the funds transfer regulation.

(3) The persons specified in this paragraph are—

(a)financial investigators accredited under section 3 of the Proceeds of Crime Act 2002 (accreditation and training) F350;

(b)persons acting on behalf of the Scottish Ministers in their capacity as an enforcement authority under that Act; and

(c)constables or equivalent officers of any law enforcement authority.

PART 8U.K. [F351Information, Investigation and Directions]

InterpretationU.K.

65.—(1) In this Part—

premises” means any building or other structure, including a moveable structure, other than premises used only as a dwelling;

tribunal” means the First-tier Tribunal or, where determined by or under Tribunal Procedure Rules, the Upper Tribunal;

(2) Unless otherwise defined in this Part—

officer” means—

(a)

an officer of the FCA, including a member of the FCA's staff or an agent of the FCA;

(b)

an officer of Revenue and Customs; or

(c)

an employee or agent of a professional body listed in Schedule 1 who is authorised by the body to act on behalf of the body for the purposes of this Part;

(d)

a relevant officer;

relevant officer” means—

(a)

in Great Britain, an officer of a local weights and measures authority;

(b)

in Northern Ireland, an officer of the Department for the Economy,

acting pursuant to arrangements made with the FCA or with the Commissioners for the purposes of these Regulations.

(3) For the purposes of this Part, a person is connected to a relevant person or a payment service provider (“a connected person”) if that person is a person listed in Schedule 5 in relation to the relevant person or payment service provider.

Power to require informationU.K.

66.—(1) A supervisory authority may, by notice in writing to a person (“P”) who is (or was at any time) a relevant person, a payment service provider or a connected person, require P to—

(a)provide specified information, or information of a specified description;

(b)produce specified documents, or documents of a specified description; or

(c)attend before an officer of the supervisory authority (or of a supervisory authority which is acting on behalf of that authority) at a time and place specified in the notice and answer questions.

(2) The information or documents must be provided or produced—

(a)before the end of such reasonable period as may be specified; and

(b)at such place as may be specified.

(3) An officer who has authorisation in writing from a supervisory authority to do so may require P without unreasonable delay to—

(a)provide the officer with specified information or information of a specified description; or

(b)produce to the officer specified documents or documents of a specified description.

(4) The powers in this regulation may only be exercised by a supervisory authority, or by an officer authorised under paragraph (3) to act on behalf of the supervisory authority, in relation to information or documents which are reasonably required by the supervisory authority in connection with the exercise by the authority of any of its supervisory functions.

(5) Where a supervisory authority or an officer requires information to be provided or documents to be produced under paragraph (1) or (3), the notice must set out the reasons why the information is required to be provided or the documents produced, unless the supervisory authority or (as the case may be) the officer is not permitted to disclose this information.

(6) The supervisory authority may require—

(a)information contained in a computer or other storage device, or recorded in any other way otherwise than in legible form to be produced to it in legible form or in a form from which the information can readily be produced in visible and legible form; and

(b)any information provided under this regulation to be provided in such form as it may reasonably require.

(7) The production of a document does not affect any lien which a person has on the document.

(8) If a supervisory authority has power under this regulation to require a person to produce a document but it appears that the document is in the possession of a third person, that power may be exercised by the supervisory authority in relation to the third person.

Requests in support of other authoritiesU.K.

67.—(1) On receiving a request to which paragraph (2) applies from a foreign authority, the supervisory authority may exercise the power conferred by regulation 66, and for these purposes, regulation 66 has effect as if it also referred to information and documents reasonably required by the supervisory authority to meet such a request.

(2) This paragraph applies if the request is made by the foreign authority in connection with the exercise by that authority of—

(a)functions provided for in the fourth money laundering directive;

(b)functions provided for in the funds transfer regulation; or

(c)functions provided for in the law of a third country equivalent to those provided for in the fourth money laundering directive or the funds transfer regulation.

(3) In deciding whether or not to exercise its powers under regulation 66 in response to a request, the supervisory authority may take into account in particular—

(a)whether, in the territory of the foreign authority concerned, corresponding assistance would be given to the supervisory authority;

(b)whether the case concerns the breach of a law, or other requirement, which has no close parallel in the United Kingdom or involves the assertion of a jurisdiction not recognised by the United Kingdom;

(c)the seriousness of the case and its importance to persons in the United Kingdom.

(4) The supervisory authority may decide not to exercise its powers under regulation 66 unless the foreign authority undertakes—

(a)to make such contribution towards the cost of doing so as the supervisory authority considers appropriate; and

(b)to comply with such conditions in relation to the information and documents as the supervisory authority considers appropriate.

F352(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) “Foreign authority” means an authority in a territory which is not part of the United Kingdom which exercises functions referred to in paragraph (2).

Requests to other authoritiesU.K.

68.—(1) This regulation applies if—

(a)documents or information which are reasonably required by a supervisory authority in connection with the exercise by the authority of any of the functions given to it under these Regulations are not (as far as the supervisory authority is aware) available in the United Kingdom; and

(b)the supervisory authority has reason to believe that such documents or information may be held by a person who is within the jurisdiction of a foreign authority.

(2) A supervisory authority may request the assistance of the foreign authority in obtaining specified information or documents which satisfy the conditions in paragraph (1).

(3) The information or documents provided to the supervisory authority pursuant to a request under paragraph (2) must only be used—

(a)for the purpose for which it was provided; or

(b)for the purposes of proceedings arising as a result of contravention of a relevant requirement in these Regulations, or proceedings arising out of such proceedings.

(4) Paragraph (3) does not apply if the foreign authority by which the information or documents were provided consents to its use.

(5) In this regulation, “foreign authority” has the meaning given in regulation 67(6).

Entry, inspection of premises without a warrant etcU.K.

69.—(1) Paragraph (2) applies where a duly authorised officer of (or acting on behalf of) a supervisory authority in relation to a relevant person or a payment service provider (“P”) has reasonable grounds to believe that—

(a)any premises are being used by P in connection with P's business or professional activities; and

(b)P may have contravened the requirements of—

F353(i). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(ii)the funds transfer regulation, or

(iii)these Regulations.

(2) The officer may, on producing evidence of the officer's authority, at any reasonable time—

(a)enter the premises;

(b)inspect the premises;

(c)observe the carrying on of business or professional activities by P;

(d)inspect any documents or other information found on the premises;

(e)require any person on the premises to provide an explanation of any document or to state where documents or information might be found;

(f)inspect any cash found on the premises.

(3) The officer may take copies of, or make extracts from, any documents found as a result of the exercise of the power in paragraph (2).

(4) In this regulation, “duly authorised officer” means—

(a)an officer of the FCA, authorised in writing to exercise the powers under this regulation on behalf of the FCA or another supervisory authority, by a Head of Department working within the enforcement function of the FCA; or

(b)an officer of Revenue and Customs authorised in writing to exercise the powers under this regulation on behalf of the Commissioners, or another supervisory authority, by an officer of Revenue and Customs of at least the grade of senior officer.

Entry of premises under warrantU.K.

70.—(1) A justice may issue a warrant under this regulation if satisfied on information given on oath (or in Scotland by evidence on oath) by a duly authorised officer acting on behalf of a supervisory authority that—

(a)there are reasonable grounds for believing that the first, second, or third set of conditions is satisfied; or

(b)there are reasonable grounds for suspecting that the fourth set of conditions is satisfied.

(2) The application for the warrant must—

(a)identify the premises to which the application relates and state that the premises is not used only as a dwelling;

(b)state that the officer has reasonable grounds to suspect a warrant is necessary in connection with the exercise of the supervisory functions of the supervisory authority for which the officer is acting and the warrant is sought for the purpose of those functions;

(c)state that the officer executing the warrant—

(i)will give to any person on the premises, when entering the premises, evidence of identification and authority to act on behalf of the supervisory authority, and

(ii)will give to that person, no later than on entering the premises, a notice identifying and explaining the powers exercisable under this regulation, and

(d)state that the warrant is sought in relation to material specified in the application, or that there are reasonable grounds for suspecting that there is material falling within regulation 66 on the premises.

(3) The first set of conditions is—

(a)that a person on whom a requirement has been imposed under regulation 66 has failed (wholly or in part) to comply with it, and

(b)that on the premises specified in the warrant—

(i)there are documents which have been required, or

(ii)there is information which has been required.

(4) The second set of conditions is—

(a)that the premises specified in the warrant are premises of—

(i)the relevant person or the payment service provider (“P”),

(ii)a member of the same group as P; or

(iii)a third person referred to in regulation 66(8);

(b)that there are on the premises documents or information in relation to which a requirement could be imposed under regulation 66, and

(c)that if such a requirement were to be imposed—

(i)it would not be complied with, or

(ii)the documents or information to which it related would be removed, tampered with or destroyed.

(5) The third set of conditions is—

(a)that an officer has been obstructed in the exercise of the power under regulation 69; and

(b)that there is on the premises specified in the warrant documents, information or cash which could be inspected under regulation 69(2)(d) or (f).

(6) The fourth set of conditions is—

(a)that an offence under these Regulations has been, is being or is about to be committed by P; and

(b)there is on the premises specified in the warrant information or documents relevant to whether the offence has been, is being or is about to be committed.

(7) A warrant under this regulation authorises the executing officer—

(a)to enter the premises specified in the warrant;

(b)to search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which the warrant was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them;

(c)to inspect any cash found on the premises;

(d)to take copies of, or extracts from, any documents or information appearing to be of the relevant kind;

(e)to require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found; and

(f)to use such force as may be reasonably necessary.

(8) Where information of the relevant kind is contained in a computer or other storage device, or is recorded in any other way otherwise than in legible form, the warrant authorises the executing officer to take possession of that information in a form in which it can be taken away and in which it is legible.

(9) A warrant under this regulation—

(a)may be exercised by any executing officer;

(b)may authorise persons to accompany any executing officer who is executing it;

(c)may be issued subject to conditions.

(10) The powers in paragraph (7) may be exercised by a person authorised by the warrant to accompany an executing officer; but that person may exercise those powers only in the company of, and under the supervision of, an executing officer.

(11) In England and Wales, sections 15(5) to (8) and 16(3) to (12) of the Police and Criminal Evidence Act 1984 F354 (execution of warrants and safeguards) apply to warrants issued under this regulation.

(12) In Northern Ireland, Articles 17(5) to (8) and 18(3) to (12) of the Police and Criminal Evidence (Northern Ireland) Order 1989 (execution of warrants and safeguards) F355 apply to warrants issued under this regulation.

(13) In this regulation—

duly authorised officer” means—

(a)

where a warrant is issued on the basis of information given on behalf of the FCA or another supervisory authority, an officer of the FCA authorised in writing to exercise the powers under this regulation by a Head of Department working within the enforcement function of the FCA,

(b)

where a warrant is issued on the basis of information given on behalf of the Commissioners or another supervisory authority, an officer of Revenue and Customs authorised in writing to exercise the powers under this regulation by an officer of Revenue and Customs of at least the grade of senior officer;

executing officer” means—

(a)

where a warrant is issued on the basis of information given on behalf of the FCA, or of a supervisory authority for which the FCA is acting, a constable,

(b)

where a warrant is issued on the basis of information given on behalf of the Commissioners, or of a supervisory authority for which the Commissioners are acting, an officer of Revenue and Customs;

justice” means—

(a)

in England and Wales, a justice of the peace;

(b)

in Northern Ireland, a lay magistrate; or

(c)

in Scotland, a sheriff or summary sheriff.

F3541984 c.60. Sections 15(5) to (8) and 16(3) to (12) have been amended by sections 113 and 114 of the Serious Organised Crime and Police Act 2005 (c.15), and S.I. 2005/3496. Section 16 has also been amended by paragraph 281 of Schedule 8 to the Courts Act 2003 (c.39).

F355S.I. 1989/1341 (N.I. 12). Articles 17 and 18 have been amended by S.I. 2007/288 (N.I.).

Retention of documents taken under regulation 66 or 70U.K.

71.—(1) Any material possession of which is taken in accordance with a requirement under regulation 66 or under a warrant issued under regulation 70 (“seized material”) may be retained for so long as it is necessary to retain it (rather than copies of it) in connection with the exercise of the functions of the supervisory authority under these Regulations for the purposes of which any requirement was imposed or the warrant was issued.

(2) If a duly authorised officer (within the meaning of regulation 70(13)) has reasonable grounds for suspecting that—

(a)the seized material may need to be produced for the purposes of legal proceedings; and

(b)it might otherwise be unavailable for those purposes,

it may be retained until the proceedings are concluded.

(3) A person claiming to be the owner of any seized material may apply to the Crown Court or (in Scotland) the sheriff or the summary sheriff for an order for the delivery of the material to the person appearing to the court, the sheriff or the summary sheriff to be the owner.

(4) If on an application under paragraph (3), the court or (in Scotland) the sheriff or the summary sheriff cannot ascertain who is the owner of the seized material the court, the sheriff or the summary sheriff may make such order as the court, the sheriff or the summary sheriff thinks fit.

(5) An order under paragraph (3) or (4) does not affect the right of any person to take legal proceedings against any person in possession of seized material for the recovery of the material.

Provision of information and warrants: safeguardsU.K.

72.—(1) A person may not be required under regulation 66, 69 [F356, 70, 74A or 74B] to produce excluded material, or to provide information, produce documents or answer questions which that person would be entitled to refuse to provide, produce or answer on grounds of legal professional privilege in proceedings in the High Court, except that a lawyer may be required to provide the full name and address of the lawyer's client.

(2) The provision of information in accordance with regulation 66, 69 [F357, 70, 74A or 74B], is not to be taken to breach any restriction, however imposed, on the disclosure of information.

(3) Where a disclosure is made in good faith in accordance with regulations 66, 69 [F358, 70, 74A or 74B] no civil liability arises in respect of the disclosure on the part of the person making the disclosure.

(4) A warrant issued under regulation 70 does not confer the right to seize privileged material or excluded material.

(5) Privileged material is any material which the person would be entitled to refuse to produce on grounds of legal professional privilege in proceedings in the High Court.

(6) In the application of this regulation to Scotland, the references in paragraphs (1) and (5)—

(a)to proceedings in the High Court are to be read as references to proceedings in the Court of Session; and

(b)to an entitlement on grounds of legal professional privilege are to be read as references to an entitlement on the grounds of confidentiality of communication—

(i)between professional legal advisers and their clients; or

(ii)made in connection with or in contemplation of legal proceedings and for the purposes of those proceedings.

(7) For the purposes of this regulation, “excluded material” means personal records which a person has acquired or created in the course of any trade, business, profession or other occupation or for the purposes of any paid or unpaid office and which is held subject—

(a)to an express or implied undertaking to hold it in confidence; or

(b)to a restriction on disclosure or an obligation of secrecy contained in any enactment, including an enactment contained in, or made under, an Act passed after this Regulation.

F358Words in reg. 72(3) substituted (10.1.2020) by