Sanctions and Anti-Money Laundering Act 2018

Regulations may not contain prohibitions for a purpose mentioned in Part 1 which have the effect of prohibiting any of the following activities—

• (a) the communication of information in the ordinary course of scientific research,

• (b) the making of information generally available to the public, or

• (c) the communication of information that is generally available to the public,

unless the interference by the regulations in the freedom to carry on the activity in question is necessary (and no more than is necessary).

30

The question whether any such interference is necessary is to be determined by the appropriate Minister making the regulations—

• (a) by reference to the circumstances prevailing at the time the regulations are made, and

• (b) having considered the purpose of the regulations as stated under section 1(3) and the need to respect the freedom to carry on that activity.

Interpretation

31

In this Schedule, any reference to goods, technology, land or services being moved, made available, acquired, provided or procured is to their being moved, made available, acquired, provided or procured (as the case may be) directly or indirectly.

32

For the purposes of this Schedule—

• (a) “export” means export from the United Kingdom,

• (b) goods removed to the Isle of Man from the United Kingdom are not to be regarded as exported, and

• (c) goods transported out of the United Kingdom by aircraft or ship as stores within the meaning of CEMA (see section 1(1) and (4) of that Act) are to be regarded as exported.

33

For the purposes of this Schedule—

• (a) “import” means import into the United Kingdom, but

• (b) goods removed to the United Kingdom from the Isle of Man are not to be regarded as imported.

34

Paragraph 33(b) does not apply to goods imported into the Isle of Man in contravention of any prohibition or requirement and which are of a description the import of which into the United Kingdom is subject to a corresponding prohibition or requirement imposed by regulations for a purpose mentioned in paragraph 3.

35

For the purposes of this Schedule—

• (a) goods, technology or land are “acquired” by a person if the person buys, leases, hires, borrows or accepts as a gift the goods, technology or land (as the case may be), and “acquisition” is to be construed accordingly, and

• (b) a reference to goods which “originate” in a country includes a reference to goods which are manufactured or produced in that country.

36

In paragraph 5 “place” includes—

• (a) any vehicle, ship or aircraft,

• (b) any installation (including a floating installation or one resting on the seabed or its subsoil or on other land covered with water or its subsoil), or

• (c) any tent or movable structure.

37

In this Schedule—

• “aircraft” includes unmanned aircraft and aircraft capable of spaceflight activities;

• “CEMA” means the Customs and Excise Management Act 1979;

• “objects of cultural interest” includes objects of historical or scientific interest;

• “regulations” means regulations under section 1;

• “ship” includes every description of vessel (including a hovercraft) used in navigation;

• “specified ship” has the meaning given by section 14;

• “technology” means information (including information comprised in software) that is capable of use in connection with—the development, production or use of any goods or software, orthe development of, or the carrying out of, an industrial or commercial activity or an activity of any other kind whatsoever;

• “transfer”, in relation to any technology, means a transfer by any means (or combination of means), including oral communication and the transfer of goods on which the technology is recorded or from which it can be derived, other than the export of such goods.

38

Nothing in section 3 prevents any reference to services in this Schedule from including financial services.

SCHEDULE 2

Regulations under section 49

1

Without prejudice to the generality of section 49, regulations under that section may do any thing mentioned in paragraphs 2 to 17.

2

• (1) Require—

• (a) the Secretary of State or the Treasury, or both of them acting jointly,

• (b) supervisory authorities (within the meaning given by paragraph 24), and

• (c) such persons carrying on relevant business (within the meaning given by that paragraph) as are prescribed for the purposes of this paragraph,

to identify and assess risks relating to money laundering, terrorist financing or other threats to the integrity of the international financial system.

• (2) Make provision about factors to be taken into account in the assessment of such risks.

3

Require any person carrying on relevant business who is of a description prescribed for the purposes of this paragraph (“a relevant person”) to have policies, controls and procedures which—

• (a) are policies, controls and procedures for mitigating and managing risks relating to money laundering, terrorist financing or other threats to the integrity of the international financial system,

• (b) are of prescribed kinds, and

• (c) are appropriate having regard to the size and nature of the business that the person carries on.

4

• (1) Require relevant persons to take prescribed measures in relation to their customers in prescribed circumstances.

• (2) Provide for the imposition of requirements relating to enhanced customer due diligence measures by reference to prescribed high-risk countries.

• (3) Provision made by virtue of sub-paragraph (2) may in particular refer to a list of countries published by the Financial Action Task Force as it has effect from time to time.

5

Make provision for and in connection with—

• (a) the provision of information by prescribed persons, and

• (b) the disclosure of information, including provision about—

• (i) the purposes for which information held in connection with anything done under the regulations may be used, and

• (ii) the persons to whom any such information may be disclosed.

6

Make provision for and in connection with the creation, production and retention of—

• (a) registers, and

• (b) records,

including registers of people with significant control and registers and records relating to the beneficial ownership of prescribed entities, trusts or other arrangements.

7

• (1) Confer supervisory functions on the Financial Conduct Authority, the Commissioners for Her Majesty's Revenue and Customs and such other bodies as may be prescribed (“supervisory authorities”) in relation to relevant persons, including powers or duties to—

• (a) collect information,

• (b) give directions,

• (c) issue guidance,

• (d) approve individuals in their capacity as relevant persons or as owner of, or in positions of control over or responsibility in, relevant persons that are not individuals, and

• (e) cooperate with other supervisory authorities or other prescribed persons.

• (2) Make provision about the exercise of functions conferred on supervisory authorities under sub-paragraph (1).

8

• (1) Confer supervisory functions on a prescribed body (an “oversight body”) in relation to bodies prescribed as, or seeking to be prescribed as, supervisory authorities, including powers or duties to—

• (a) collect information,

• (b) give directions,

• (c) issue guidance, and

• (d) give recommendations as to whether bodies should be, or should cease to be, prescribed as supervisory authorities.

• (2) Make provision about the exercise of functions conferred on an oversight body under sub-paragraph (1).

9

Make provision for and in connection with the registration of relevant persons by supervisory authorities, including—

• (a) provision which prohibits a person from carrying on a business of a prescribed description unless registered, and

• (b) provision about the suspension or cancellation of a person's registration.

10

Make provision enabling supervisory authorities to enter into arrangements with other bodies for the purposes of the enforcement of the regulations.

11

• (1) Confer investigatory powers on—

• (a) supervisory authorities, and

• (b) prescribed enforcement partners within the meaning given by paragraph 24.

• (2) Make provision about the exercise of investigatory powers.

• (3) Make provision enabling investigatory powers to be exercised by a supervisory authority in relation to persons supervised by another supervisory authority.

• (4) In this paragraph “investigatory powers” includes powers of entry, search, inspection, seizure of documents or information and retention of documents or information.

12

• (1) Authorise supervisory authorities to impose charges on persons supervised by them in respect of expenses incurred for the purposes of the regulations.

• (2) Make provision in connection with any charges for which provision is made under sub-paragraph (1), including provision for charges to meet expenses incurred by enforcement partners for the purposes of the regulations.

• (3) Where provision is made by virtue of paragraph 11(3), authorise supervisory authorities to impose charges on other supervisory authorities in respect of expenses incurred in relation to the exercise of powers in accordance with such provision.

• (4) Authorise an oversight body to impose charges on supervisory authorities or persons seeking to be prescribed as supervisory authorities in respect of the exercise by the oversight body of functions conferred on it by the regulations.

• (5) Make provision in connection with any charges for which provision is made under sub-paragraph (3) or (4).

13

• (1) Authorise the Financial Conduct Authority and the Commissioners for Her Majesty's Revenue and Customs to impose civil monetary penalties in relation to the contravention of prescribed requirements.

• (2) Authorise supervisory authorities to impose civil penalties (other than monetary penalties) in relation to the contravention of prescribed requirements, including—

• (a) the publication of statements of censure,

• (b) the suspension or revocation of, or restrictions on, any permission or authorisation granted by a supervisory authority,

• (c) the suspension or cancellation of, or restrictions on, a person's registration as mentioned in paragraph 9, and

• (d) restrictions on the holding of management responsibilities.

• (3) Authorise an oversight body to—

• (a) impose civil monetary penalties, and

• (b) publish statements of censure,

in relation to the contravention of prescribed requirements by supervisory authorities.

• (4) Make provision in connection with any civil penalties for which provision is made under sub-paragraph (1), (2) or (3), including provision for publishing details of persons who have incurred penalties.

14

Make provision for and in connection with the grant of injunctions (or, in Scotland, interdicts) and other orders by prescribed courts in relation to the contravention of prescribed requirements.

15

Make provision—

• (a) creating criminal offences for the purposes of the enforcement of requirements imposed by or under regulations under section 49, and

• (b) dealing with matters relating to any offences created for such purposes by regulations under section 49,

but see paragraphs 18 and 19.

16

Make provision for and in connection with reviews of, and appeals against, decisions of—

• (a) prescribed supervisory authorities, and

• (b) an oversight body.

17

Make provision exempting prescribed persons from prescribed requirements, generally or in prescribed circumstances.

Criminal offences: restrictions and relationship with civil penalties

18

Regulations under section 49 may not provide for an offence created by such regulations to be punishable with imprisonment for a period exceeding—

• (a) in the case of conviction on indictment, 2 years;

• (b) in the case of summary conviction, 3 months.

19

Regulations under section 49 may provide for the creation of a criminal offence only if the regulations also provide for either or both of the following in relation to the offence—

• (a) a mental element necessary for its commission;

• (b) a defence to it (for example, a defence grounded on a person's knowledge or belief, or a defence that a person took all reasonable steps and exercised all due diligence).

20

Regulations under section 49 which confer a power to impose a civil monetary penalty must provide that a person is not liable to such a penalty in respect of acts or omissions for which the person has been convicted of a criminal offence created by such regulations.

Criminal offences: report in respect of offences in regulations

21

• (1) In this paragraph “relevant regulations” means regulations under section 49 which create any offence for the purposes of the enforcement of any requirements imposed by or under regulations under section 49.

• (2) The appropriate Minister making any relevant regulations (“the Minister”) must at the required time lay before Parliament a report which—

• (a) specifies the offences created by the regulations, indicating the requirements to which those offences relate,

• (b) states that the Minister considers that there are good reasons for those requirements to be enforceable by criminal proceedings and explains why the Minister is of that opinion, and

• (c) in the case of any of those offences which are punishable with imprisonment—

• (i) states the maximum terms of imprisonment that apply to those offences,

• (ii) states that the Minister considers that there are good reasons for those maximum terms, and

• (iii) explains why the Minister is of that opinion.

• (3) Sub-paragraph (4) applies where an offence created by the regulations relates to particular requirements and the Minister considers that a good reason—

• (a) for those requirements to be enforceable by criminal proceedings, or

• (b) for a particular maximum term of imprisonment to apply to that offence,

is consistency with another enactment relating to the enforcement of similar requirements.

• (4) The report must identify that other enactment.

• (5) In sub-paragraph (3) “another enactment” means any provision of or made under an Act, other than a provision of the regulations to which the report relates.

• (6) In sub-paragraph (2) “the required time” means the same time as the draft of the statutory instrument containing the regulations is laid before Parliament.

• (7) This paragraph applies to regulations which amend other regulations under section 49 so as to create an offence as it applies to regulations which otherwise create an offence.

Extra-territorial application

22

• (1) Regulations under section 49 may impose requirements in relation to conduct outside the United Kingdom by a United Kingdom person.

• (2) In sub-paragraph (1) “United Kingdom person” means—

• (a) a United Kingdom national,

• (b) a body incorporated or constituted under the law of any part of the United Kingdom, ...

• (c) a body within paragraph (3) or (4) of regulation 9 of the Money Laundering Regulations 2017 (bodies to be regarded for the purposes of those Regulations as carrying on business in the United Kingdom), as that regulation has effect immediately before it is saved by section 2 of the European Union (Withdrawal) Act 2018 , or

• (d) a person—

• (i) who does not fall within any of paragraphs (a) to (c), and

• (ii) who is a trustee with links to the United Kingdom (see paragraph 22A).

• (3) For this purpose a United Kingdom national is an individual who is—

• (a) a British citizen, a British overseas territories citizen, a British National (Overseas) or a British Overseas citizen,

• (b) a person who under the British Nationality Act 1981 is a British subject, or

• (c) a British protected person within the meaning of that Act.

• (4) In this paragraph “conduct” includes acts and omissions.

Money Laundering Regulations 2017

23

• (1) Without prejudice to anything in section 49, paragraphs 1 to 22 or section 54(2), regulations under section 49 may—

• (a) subject to any modifications the appropriate Minister making those regulations considers appropriate, make provision corresponding or similar to any provision of relevant money laundering Regulations as those Regulations have effect immediately after being saved by section 2 or 3 of the European Union (Withdrawal) Act 2018;

• (b) amend or revoke any relevant money laundering Regulations.

• (2) In sub-paragraph (1) “relevant money laundering Regulations” means—

• (a) the Money Laundering Regulations 2017;

• (b) Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds;

• (c) any provision made under Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing by virtue of Article 290 or 291(2) of the Treaty on the Functioning of the European Union.

• (2A) In paragraph 4 (measures in relation to customers of relevant persons), the reference in sub-paragraph (2) to requirements includes requirements imposed by or under the Money Laundering Regulations 2017.

• (3) In paragraph 15 (offences), any reference to regulations under section 49 includes the Money Laundering Regulations 2017.

• (4) In paragraph 21 (report in respect of offences)—

• (a) the reference in sub-paragraph (1) to requirements imposed by or under regulations under section 49 includes requirements imposed by or under the Money Laundering Regulations 2017, and

• (b) the reference in sub-paragraph (7) to other regulations under section 49 includes the Money Laundering Regulations 2017.

Interpretation

24

In this Schedule—

• “enforcement partners” means bodies with which supervisory authorities enter into arrangements for the purposes of the enforcement of regulations under section 49;

• “money laundering” has the meaning given by section 49;

• “Money Laundering Regulations 2017” means the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692);

• “oversight body” means a body on which functions are conferred under paragraph 8(1);

• “relevant business” means business of a kind which entails risks relating to money laundering, terrorist financing or other threats to the integrity of the financial system;

• “relevant person” means a person on whom requirements are imposed under paragraph 3;

• “requirements” includes prohibitions;

• “supervisory authority” means the Financial Conduct Authority, the Commissioners for Her Majesty's Revenue and Customs or any other body on which functions are conferred under paragraph 7(1);

• “terrorist financing” has the meaning given by section 49.

SCHEDULE 3

PART 1 — Amendments consequential on Parts 1 and 2

Immigration Act 1971 (c. 77)

1

• (1) Section 8B of the Immigration Act 1971 (persons excluded from the United Kingdom under international obligations) is amended as follows.

• (2) In the heading for “international obligations” substitute “ certain instruments ”.

• (3) For subsection (4) substitute—

(4) “Excluded person” means— (a) a person named by or under, or of a description specified in, an instrument falling within subsection (5), or (b) a person who under regulations under section 1 of the Sanctions and Anti-Money Laundering Act 2018 is an excluded person for the purposes of this section (see section 4 of that Act).

• (4) In subsection (5A)(b), for the words from the beginning to “that subsection” substitute “ the person is within subsection (4)(a) and not within subsection (4)(b) and has been exempted from the application of subsection (1), (2) or (3), as the case may be, ”.

• (5) After subsection (5A) insert—

(5B) In relation to any person within subsection (4)(b), subsections (1) to (3) are subject to any exception created under, or direction given by virtue of, section 15(4) of the Sanctions and Anti-Money Laundering Act 2018 (power to create exceptions etc).

Senior Courts Act 1981 (c. 54)

2

In paragraph 2 of Schedule 1 to the Senior Courts Act 1981 (business allocated to the Queen's Bench Division), after sub-paragraph (be) insert—

(bf) all proceedings— (i) on an application under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (court review of decisions), or (ii) on a claim arising from any matter to which such an application relates;”.

Regulation of Investigatory Powers Act 2000 (c. 23)

3

• (1) Section 18 of the Regulation of Investigatory Powers Act 2000 (exceptions to matters excluded from legal proceedings) is amended as follows.

• (2) In subsection (1), after paragraph (de) insert—

(df) any proceedings— (i) on an application under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (court review of decisions), or (ii) on a claim arising from any matter to which such an application relates, or any proceedings arising out of such proceedings;

.

• (3) In subsection (2), after paragraph (zd) insert—

(ze) in the case of proceedings falling within paragraph (df), to— (i) a person, other than the Secretary of State or the Treasury (as the case may be), who is or was a party to the proceedings, or (ii) any person who for the purposes of the proceedings (but otherwise than by virtue of appointment as a special advocate) represents a person falling within sub-paragraph (i);

.

Serious Organised Crime and Police Act 2005 (c. 15)

4

In section 61(1) of the Serious Organised Crime and Police Act 2005 (offences to which investigatory powers etc apply), after paragraph (i) insert—

(j) any offence under regulations under section 1 of the Sanctions and Anti-Money Laundering Act 2018 (sanctions regulations) which is specified by those regulations by virtue of section 17(8) of that Act.

Serious Crime Act 2007 (c. 27)

5

• (1) Schedule 1 to the Serious Crime Act 2007 (offences in relation to which a serious crime prevention order may be made) is amended as follows.

• (2) In paragraph 13B after sub-paragraph (5) insert—

(5A) An offence under regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.

• (3) In paragraph 16MA after sub-paragraph (5) insert—

(5A) An offence under regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.

• (4) In paragraph 29A after sub-paragraph (5) insert—

(5A) An offence under regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018.

• (5) In the italic headings before each of paragraphs 13B, 16MA and 29A, omit “Financial”.

Crime and Courts Act 2013 (c. 22)

6

• (1) Part 2 of Schedule 17 to the Crime and Courts Act 2013 (offences in relation to which a deferred prosecution agreement may be entered into) is amended as follows.

• (2) In paragraph 26A, after sub-paragraph (5) insert—

(5A) An offence under regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018 (sanctions regulations).

• (3) After paragraph 27 insert—

(27A) An offence under regulations made under section 49 of the Sanctions and Anti-Money Laundering Act 2018 (money laundering and terrorist financing etc).

Investigatory Powers Act 2016 (c. 25)

7

In Schedule 3 to the Investigatory Powers Act 2016 (exceptions to section 56), after paragraph 9 insert—

(9A) (1) Section 56(1) does not apply in relation to any proceedings— (a) on an application under section 38 of the Sanctions and Anti-Money Laundering Act 2018 (court review of decisions), or (b) on a claim arising from any matter to which such an application relates, or any proceedings arising out of such proceedings. (2) But sub-paragraph (1) does not permit the disclosure of anything to— (a) any person, other than the Secretary of State or the Treasury (as the case may be), who is or was a party to the proceedings, or (b) any person who— (i) represents such a person for the purposes of the proceedings, and (ii) does so otherwise than by virtue of appointment as a special advocate.

Policing and Crime Act 2017 (c. 3)

8

• (1) Part 8 of the Policing and Crime Act 2017 (financial sanctions) is amended as follows.

• (2) In section 143(4) (meaning of “financial sanctions legislation”) after paragraph (e) insert—

(f) a provision of regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018 that contains a prohibition or requirement imposed for a purpose mentioned in section 3(1) or (2) of that Act.

• (3) After section 143(4) insert—

(4A) But “financial sanctions legislation” does not include any provision of regulations made under section 1 of the Sanctions and Anti-Money Laundering Act 2018 which is specified in the regulations as a provision to be regarded as not being financial sanctions legislation for the purposes of this Part.

• (4) Omit sections 152 to 156 (avoidance of delay: temporary regulations).

PART 2 — Repeals etc consequential on repeals in Terrorist Asset-Freezing etc Act 2010

Repeals and revocations

9

The following provisions are repealed or revoked—

Consequential amendment

10

In Schedule 3 to the Investigatory Powers Act 2016 (exceptions to section 56), in paragraph 12, for “neither paragraph 10 nor paragraph 11 permits” substitute “ paragraph 10 does not permit ”.

Additional requirements for regulations for a purpose within section 1(2)

Reports on progress towards register of beneficial owners of overseas entities

Saving for prerogative powers

Further provision

Enforcement

Restriction

Interpretation

Regulations under section 49

Criminal offences: restrictions and relationship with civil penalties

Criminal offences: report in respect of offences in regulations

Extra-territorial application

Money Laundering Regulations 2017

Interpretation

Immigration Act 1971 (c. 77)

Senior Courts Act 1981 (c. 54)

Regulation of Investigatory Powers Act 2000 (c. 23)

Serious Organised Crime and Police Act 2005 (c. 15)

Serious Crime Act 2007 (c. 27)

Crime and Courts Act 2013 (c. 22)

Investigatory Powers Act 2016 (c. 25)

Policing and Crime Act 2017 (c. 3)

Repeals and revocations

Consequential amendment

Editorial notes