Ninth Report Contents

Appendix 1: Draft Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018

Additional information from HM Treasury

Q1: In the Explanatory Memorandum you say: “The relevant provisions of the [Money Laundering Regulations], the Funds Transfer Regulation and the Oversight Regulations will be amended so as to remove any requirements to transmit information to EU institutions, or to have regard to guidelines published by the [European Supervisory Authorities].” Regulatory bodies in different countries presumably often rely on exchanging information with their counterparts in order to expose and control money-laundering. Even if the Financial Conduct Authority will not be legally required to pass information to EU institutions, has it—or the UK Government—made a policy statement about future cooperation with counterparts in other countries in dealing with money-laundering?

A1: National anti-money laundering (AML) authorities often make use of international cooperation to detect, prevent and investigate money laundering. Within the MLRs (as defined in the explanatory memorandum for this SI), there’s a legal gateway created by Regulation 50(4) which provides that UK supervisory authorities must take such steps as they consider appropriate to cooperate with overseas AML authorities. Although that regulation will undergo technical amendments if this instrument is commenced, the substance of Regulation 50(4) will remain unchanged (and so the obligation will remain on UK supervisors). Where changes to information-submission requirements are being made by this SI, these relate primarily to the specific duties in the current MLRs to provide notifications/information directly to EU institutions. Examples include deleting obligations on the UK in Regulation 16(7) to transmit the National Risk Assessment of Money Laundering and Terrorist Financing to the European Commission and European Supervisory Authorities.

Separately, and as you may already be aware, the Political Declaration setting out the framework for the future relationship between the EU and UK that was endorsed by the European Council on 25 November contains, at paragraph 84, a statement of mutual intent that the future relationship between the UK and EU should cover arrangements across three areas of cooperation. One of these is anti-money laundering and counter-terrorist financing. Further detail on this is included in paragraphs 85-91, which include commitments to: (a) putting in place arrangements for effective and swift data sharing and analysis to support law enforcement; (b) putting in place measures for practical cooperation between law enforcement authorities; and (c) agreeing to support international efforts to prevent and fight against money laundering and terrorist financing, particularly through compliance with the international AML standards set by the Financial Action Task Force (FATF) and associated cooperation.

Paragraph 39 of the Political Declaration, which relates to financial services more widely, also contains an agreement between the UK and EU that close and structured cooperation on regulatory and supervisory matters is in our mutual interest. This builds upon the active role already played by the UK in international fora relating to AML, including the FATF and the Egmont Group of Financial Intelligence Units.

4 December 2018

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