Syed Rahman of Rahman Ravelli considers the UK government’s aim of ushering in a more appropriate money laundering regime.
“Money laundering’’ and “the UK’’ are phrases that very rarely appear together in articles that could be considered good news.
But, if the UK government has its way, that may be about to change – at least in one particular case. The government has stated that it will bring forward a series of changes to the Money Laundering Regulations (MLRs) by the end of the year. These changes, it believes, will make the regulations “clearer and more proportionate’’ and will be part of plans to support the professional services sector.
Coming as part of the government’s industrial strategy, the changes will come after a decade of tightening the MLRs – a tightening that has led to professional services firms being fined in the course of the regulations being enforced. This has, perhaps inevitably, led to accusations that the regime is overly severe and places an excessive burden on those who must comply with it.
The argument that runs counter to that is that MLRs play a vitally important role when it comes to tackling money laundering and terrorist financing and, in doing this, make the UK a popular destination for businesses from around the world. Yet eye-watering estimates about how much laundered money affects the UK each year – the National Crime Agency says it is a realistic possibility that it is hundreds of billions of pounds – cast some doubt on this train of thought. And the government now seems to have recognised that revisions are needed to make the MLRs more proportionate to the risks involved and less burdensome on those subject to them.
The upshot of this is that we can expect changes that make the MLRs less of a grinding chore for the likes of law firms and others in the professional sector. As yet, the details are scant. But changes are promised that will make MLRs more effective and will embrace the use of digital technology to streamline checks and processes for firms and their clients.
The government has said that some regulators in the professional services sector are not “consistently aligned’’ with its aims for economic growth. This, presumably, is why its strategy plans to explore ways of giving regulators what is termed “a clear set of streamlined duties and steers focussed strongly on investment and growth’’. It also talks of processes and published timelines for growth-related decisions and of regulators being held to account by government over their performance.
It remains to be seen precisely how these opinions and ambitions are translated into real policy. But for many in the professional services sector, it will be the changes to the MLRs that will be most keenly anticipated, as they have the potential to usher in sizeable change in their day-to-day activities.
There has been no shortage of figures in the sector who have argued that the current MLR regime is not proportionate to the risk. There have been calls for it to be more targeted to that risk while not placing excessive cost and time burdens on those subject to it. Anything that ensures that and can bring greater clarity and a lesser burden is to be welcomed.
