Legalize / United Kingdom / Statutory-Instrument

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

Type Statutory-Instrument

Publication 2026-06-30

Last updated 2026-07-03

State In force

Department Statute Law Database

Source legislation.gov.uk

PDF Download

articles Not indexed

Reform history JSON API

(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, terrorist financing and proliferation 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, terrorist financing and proliferation financing.

(5) A relevant parent undertaking must ensure that information relevant to the prevention of money laundering, terrorist financing and proliferation 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.

(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 controls

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;

(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, terrorist financing and proliferation financing to which the relevant person's business is subject, or

(bb) prevention or detection of money laundering, terrorist financing and proliferation 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

(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) or 19A(1), and in particular to—

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

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

(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 18A(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.

Central contact points: electronic money issuers and payment service providers

22

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Requirement on authorised person to inform the FCA

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.

(3A) If, at any time after an authorised person whose supervisory authority is the FCA (“A”) has provided the FCA with any information under this regulation—

(a) there is a material change affecting any matter contained in that information; or

(b) it becomes apparent to A that the information contains an inaccuracy,

then A must provide the FCA 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.

(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.

Training

24

(1) A relevant person must—

(a) take appropriate measures to ensure that its relevant employees , 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, terrorist financing and proliferation 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, terrorist financing or proliferation 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 and 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, terrorist financing and proliferation financing to which the relevant person's business is subject; or

(ii) prevention or detection of money laundering, terrorist financing and proliferation 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, terrorist financing and proliferation 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 action

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 , 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;

(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

(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

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.

(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 3 — Ownership and Management Restrictions

Prohibitions and approvals

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;

(d) high value dealers;

(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.

(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

(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;

(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 — Customer Due Diligence

CHAPTER 1 — Customer due diligence: general

Customer due diligence

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 £800;

(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 a letting agent, a high value dealer, an art market participant, a cryptoasset exchange provider of the kind referred to in paragraph (7D) or (7E), a custodian wallet provider of the kind referred to in paragraph (7E) or a casino must also apply customer due diligence measures if the person carries out an occasional transaction that amounts to £12,000 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 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 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 ); 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 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.

(7A) A letting agent must also apply customer due diligence measures in relation to any occasional 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 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 occasional transaction, whether executed in a single operation or in several operations which appear to be linked, whose value amounts to £10,000 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 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)).

(7E) Without prejudice to paragraph (7D), a cryptoasset exchange provider and a custodian wallet provider must also apply customer due diligence measures in relation to a cryptoasset transfer which is equal to or exceeds the equivalent in cryptoassets of £800 in value (taken together with any other cryptoasset transfer which appears to be linked).

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

(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 ;

(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;

(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.

(10) In this regulation, “cryptoasset” and “cryptoasset transfer” have the meanings given by regulation 64B (cryptoasset transfers: interpretation).

Customer due diligence measures

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.

(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), (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.

(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 information delivered to the registrar under any enactment that requires information to be delivered to the registrar about registrable persons, registrable relevant legal entities or registrable beneficial owners.

(9A) In paragraph (9)—

“registrable beneficial owner” has the meaning given in section 4(5) (application for registration) of, and Schedule 2 (registrable beneficial owners) to, the Economic Crime (Transparency and Enforcement) Act 2022;

“registrable person” has the meaning given in section 790C(4) (key terms) of the Companies Act 2006, including as that definition is applied under any enactment;

“registrable relevant legal entity” has the meaning given in section 790C(8) of the Companies Act 2006, including as that definition is applied under any enactment;

“registrar” means—in relation to information delivered to the registrar under Part 1 (registration of overseas entities) of the Economic Crime (Transparency and Enforcement) Act 2022, the registrar of companies for England and Wales;in relation to information delivered to the registrar under any other enactment, the registrar referred to in section 1060(3) (the registrar) of the Companies Act 2006.

(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;

(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 , or

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

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

(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.

(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 ); and

(b) that process is secure from fraud and misuse and capable of providing assurance 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.

Additional customer due diligence measures: credit institutions and financial institutions

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 an 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.

(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 ; 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.

(10) Paragraphs (11) to (17) apply if the relevant person provides a customer with a new account into which monies are pooled (“pooled account”) on or after the day on which this paragraph comes into force.

(11) When providing a customer with a pooled account, the relevant person must—

(a) take reasonable measures to understand the purpose of the pooled account and how the customer proposes to use it;

(b) take steps to be satisfied that the purpose and proposed use under sub-paragraph (a) is consistent with the relevant person’s knowledge of the customer, the customer’s business and risk profile, and must conduct updated customer due diligence measures where it is not so satisfied; and

(c) once satisfied under sub-paragraph (b), assess the level of risk of money laundering and terrorist financing associated with the customer using the pooled account and take reasonable steps to manage and mitigate the risks arising from that use by the customer.

(12) In making an assessment under paragraph (11)(c), the relevant person must consider, among other things, the appropriateness of imposing controls on the pooled account to manage and mitigate the risks.

(13) The relevant person must be able to demonstrate to its supervisory authority that the extent of the measures it has taken to satisfy the requirements under paragraphs (11) and (12) is appropriate in view of the risks of money laundering and terrorist financing.

(14) When a customer has a pooled account with a relevant person, the customer must make available to the relevant person, on request from the relevant person, information on the identity of the persons on whose behalf monies are held in the pooled account and information on the identity of any beneficial owners of those persons.

(15) A customer which is provided with a pooled account by a relevant person must maintain accurate and up-to-date records in writing of all the monies that are paid into and out of the pooled account for a period of five years beginning, in the case of each payment into or out of the account, on the date on which the customer knows, or has reasonable grounds to believe, that the payment is complete.

(16) A customer of the relevant person must on request by any law enforcement authority provide information about itself and the management and use of any pooled account it has with the relevant person to that law enforcement authority.

(17) A customer is not required under paragraph (13), (14) or (16) to provide information which that person would be entitled to refuse to provide on grounds of legal professional privilege in proceedings in the High Court (or, in Scotland, on the ground of confidentiality of communications in the Court of Session).

(18) A disclosure made under paragraph (13), (14) or (16) is not to be taken to breach a duty of confidentiality owed by a professional legal adviser to a client of the adviser or any other restriction, however imposed, on the disclosure of information.

Timing of verification

30

(1) Subject to paragraph (1A), this regulation applies when a relevant person is required to take any measures under regulation 27, 28 or 29.

(1A) This regulation does not apply to a credit institution in relation to an insolvent bank customer where regulation 30ZA applies.

(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.

(8) In this regulation, “insolvent bank customer” has the meaning given in regulation 30ZA(5).

Insolvent bank customers

30ZA

(1) Subject to paragraphs (2) and (3), a credit institution may permit an insolvent bank customer to open an account and transact from it before completing customer due diligence measures.

(2) Before permitting an insolvent bank customer to open an account and transact from it under paragraph (1), the credit institution must—

(a) identify the customer in accordance with regulation 28(2)(a); and

(b) where applicable, identify a person purporting to act on the customer’s behalf and verify that such person is authorised so to act in accordance with regulation 28(10)(a) and (b).

(3) After permitting an insolvent bank customer to open an account and transact from it under paragraph (1), the credit institution must—

(a) apply the other customer due diligence measures required by regulation 28 as soon as practicable; and

(b) if it becomes apparent that any of the situations or cases set out in regulation 33(1) apply, carry out no further transactions from the insolvent bank customer’s account until it has completed the customer due diligence measures required by regulation 28, with the exception of regulation 28(11).

(4) For the purposes of this regulation, a credit institution is to be treated as identifying an insolvent bank customer that is a body corporate if the credit institution—

(a) obtains the information listed in regulation 28(3)(a); and

(b) where the insolvent bank customer is not a company which is listed on a regulated market—

(i) takes reasonable measures to determine the information listed in regulation 28(3)(b); and

(ii) identifies the beneficial owner where the customer is beneficially owned by another person.

(5) In this regulation—

“insolvency date” in respect of an insolvent bank means the date on which a bank insolvency order is made in relation to the bank under section 94 (the order) of the Banking Act 2009.

“insolvent bank” means either—a bank as defined in section 2 (interpretation: “bank”) of the Banking Act 2009 that has entered into the procedure in Part 2 of that Act; ora building society as defined in section 119 (interpretation) of the Building Societies Act 1986 that has entered into the procedure in Part 2 of the Banking Act 2009, as applied and modified by section 90C (application of bank insolvency and administration legislation to building societies) of the Building Societies Act 1986;

“insolvent bank customer” means any customer—which the credit institution is reasonably satisfied was a customer of an insolvent bank at the insolvency date in respect of that insolvent bank; andwith whom the credit institution begins to establish a business relationship within the period of 30 days beginning with the insolvency date in respect of that insolvent bank.

Requirement to report discrepancies in registers

30A

(1) Subject to paragraph (8A), 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, ...

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

(f) an overseas entity which is subject to registration under Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022,

a relevant person must collect an excerpt of the register which contains full details of any information specified in paragraph (1A) held on the register at the relevant time before the business relationship is established, or must establish from its inspection of the register that there is no such information held on the register at that time.

(1A) The information specified in this paragraph is as follows—

(a) in relation to a firm of a type described in paragraphs (1)(a) to (e), information relating to beneficial owners of the customer; and

(b) in relation to an overseas entity of a type described in paragraph (1)(f), required information relating to registrable beneficial owners specified under Schedule 1 to the Economic Crime (Transparency and Enforcement) Act 2022.

(2) The relevant person must report to the person mentioned in paragraph (3) any material 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.

(2A) When taking measures to fulfil the duties to carry out customer due diligence and ongoing monitoring of a business relationship (including enhanced customer due diligence and enhanced ongoing monitoring) under Part 3 of these Regulations after a business relationship with a customer of a type described in paragraph (1)(a) to (f) has been established, a relevant person must also collect an excerpt of the register which contains full details of any information specified in paragraph (1A) which is held on the register at that time, or must establish from its inspection of the register that there is no such information held on the register at that time.

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

(a) which the relevant person collects under paragraph (2A), and

(b) which otherwise becomes available to the relevant person in the course of carrying out its duties under these Regulations.

(3) A material discrepancy referred to in paragraphs (2) and (2B) must be reported—

(a) if it relates to a firm of a type described in paragraph (1)(a) to (d), to the registrar referred to in section 1060(3) of the Companies Act 2006;

(b) if it relates to a trust of a type described in paragraph (1)(e), to the Commissioners;

(c) if it relates to an overseas entity of a type described in paragraph (1)(f), to the registrar of companies for England and Wales.

(4) The relevant person is not required under paragraph (2) or (2B) 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 a material 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—

(a) section 1087 of the Companies Act 2006 (material not available for public inspection), including for the purposes of that section as applied—

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

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

(iii) to eligible Scottish partnerships by regulation 61 of the Scottish Partnerships (Register of People with Significant Control) Regulations 2017; and

(b) section 22 of the Economic Crime (Transparency and Enforcement) Act 2022 (material unavailable for inspection).

(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) In this regulation, a “material discrepancy” is one described in Schedule 3AZA.

(8A) In relation to an insolvent bank customer of a type described in any of sub-paragraphs (a) to (f) of paragraph (1), a credit institution may comply with the requirement in paragraph (1) after the establishment of a business relationship with that customer.

(8B) In this regulation, “insolvent bank customer” has the meaning given in regulation 30ZA(5).

(9) In this regulation “the register” means—

(a) in relation to a customer which is of the type described in paragraph (1)(a), the register within the meaning of section 1080(2) of the Companies Act 2006;

(b) in relation to a customer which is a firm of a type described in paragraph (1)(b) to (d), the records of information mentioned in section 1080(1)(a) of the Companies Act 2006 relating to such firm;

(c) in relation to a customer which is an overseas entity of a type described in paragraph (1)(f), the register referred to in section 3(1) of the Economic Crime (Transparency and Enforcement) Act 2022.

Requirement to cease transactions etc

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;

(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 ; or

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

(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)) 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.

Exception for trustees of debt issues

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 ; and

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

CHAPTER 2 — Enhanced customer due diligence

Obligation to apply enhanced customer due diligence

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 ... with a person established in a FATF call for action country or in relation to any relevant transaction where either of the parties to the transaction is established in a FATF call for action 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;

(f) in any case where—

(i) a transaction is unusually complex or unusually large in each case given the nature of the transaction,

(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 a third country if all the following conditions are satisfied—

(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 requirements 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.

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

(a) a “FATF call for action country” means a country named on the list of High-Risk Jurisdictions subject to a Call for Action published by the Financial Action Task Force as such list has effect from time to time;

(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;

(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.

(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.

(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;

(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 a state in exchange for transfers of capital, purchase of a property, government bonds or investment in corporate entities in that 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 an 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;

(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;

(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 ), 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 , 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 June 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.

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

Enhanced customer due diligence: credit institutions, financial institutions and correspondent relationships

34

(1) A credit institution or financial institution (the “correspondent”) which has or proposes to have a correspondent relationship involving 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;

(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 .

Enhanced customer due diligence: politically exposed persons

35

Reading this document does not replace reading the official text published on legislation.gov.uk. Contains public sector information licensed under the Open Government Licence v3.0. We assume no responsibility for any inaccuracies arising from the conversion of the original CLML XML to this format.

This text is published under legislation.gov.uk's own terms of reuse, not a Legalize or public-domain licence. legislation.gov.uk
Open Government Licence v3.0 (attribution required)
© Crown and database right. Derived from content available under the Open Government Licence v3.0 from legislation.gov.uk.