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Volume 3, Edition 1 Chatterbox 07/04/2020

Part Two: Regulatory Response
In Focus: FATF

To maintain overall trust in the market, https://www.fca.org.uk/publication/
fair pricing will be important to ensure corporate/sector-views-2020.
Monitoring Iran’s actions to
address deficiencies in its AML/ firms do not discriminate against the pdf#page=79
vulnerable or those who are less able
CFT system
to act.
Given Iran’s failure to enact the
Palermo and Terrorist Financing Money Laundering Regulations 2019
Conventions in line with the FATF
Standards, the FATF has lifted fully
lifts the suspension of counter-
measures and has called calls on its
members and urges all jurisdictions
to apply effective countermeasures
in line with Recommendation 19.

Examples of the countermeasures
that could be undertaken by
countries include the following, January 10th, 2020 saw the businesses carrying out crypto asset
and any other measures that have a implementation of the EU 5th Money activities.
similar effect in mitigating risks: Laundering Directive by UK plc in
• Requiring financial institutions to
apply specific elements of enhanced The Money Laundering and Terrorist This means firms will have to fulfil
due diligence. Financing (Amendment) Regulations CDD obligations, assess money
• Introducing enhanced relevant 2019 (“MLR 2019”). laundering and terrorist financing
reporting mechanisms or systematic risks, and report suspicious
reporting of financial transactions. In case you missed it, or the period of activities. These CDD measures
• Prohibiting financial institutions enforced absence at home has caused must be completed before a business
from establishing branches or it to drift away, here is a summary of relationship is established (or before
representative offices in the country some of the key changes: carrying out an occasional transaction
concerned worth over EUR 10,000). These firms
• Limiting business relationships
or financial transactions with the 1. Regulation 13 expands the scope of will have to register with the Financial
identified country or persons in that obliged entities within the property Conduct Authority (FCA) during 2020.
country. sector to include letting agents Banks offering accounts to such
• Prohibiting financial institutions involved in high value transactions clients should consider putting in
from relying on third parties located with monthly rent of EUR 10,000 or place monitoring to identify such
in the country concerned to conduct more. Letting agency work includes clients and activity to ensure that this
elements of the CDD process. introductory services, lets only, rent is authorised activity and that the
• Requiring financial institutions to collection, commercial lettings, full client is not providing a gateway to the
review and amend, or if necessary property management, etc. financial services sector.
terminate, correspondent
relationships with financial Customer due diligence (CDD)
institutions in the country will have to be completed before a 3. Regulations 27, 28 and 29 introduce
concerned. business relationship is established, new and explicit requirements to
which will be before the first deposit understand the ownership and control
http://www.fatf-gafi.org/publications/ or rent payment is made above the structure of the customer as part of
high-risk-and-other-monitored- EUR 10,000 threshold. the CDD obligations. There is also a
jurisdictions/documents/call-for-action- Banks might want to ensure that new explicit requirement to determine
february-2020.html#fn2
clients providing lettings agency the constitution and full names of
services are aware of their obligations the board of directors and the senior
and are now appropriately registered persons of a body corporate when the
with the supervisory authorities. beneficial owner cannot be identified.
Previously, firms only had to take
2. Regulation 8 now captures reasonable measures to do so.

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