Legal View: Get ready for the impact of 5MLD

On 20 December 2019, the Gambling Commission issued a warning to remote and non-remote casino operators to implement changes to their policies and procedures that will be necessary when the EU 5^th Money Laundering Directive (5MLD) comes into force on 10 January 2020.  HM Treasury is currently revising the Money Laundering Regulations 2017 to take account of the changes to be introduced by 5MLD.  These revisions must be transposed into EU state national laws no later than 10 January 2020.

Despite the Conservative win in the UK General Election, which now makes Brexit a certainty,  5MLD must still be implemented in the UK.

Unfortunately, the Gambling Commission will not be issuing the 5^th edition of its revised guidance to remote and non-remote casinos until 10 January 2020 but has warned operators that they must be compliant with legislative changes from the implementation date.  This means that operators must act promptly and urgently to update their policies, procedures and risk assessments.

While operators do not have sight of the revised guidance, we know how 5MLD will impact them:

• They must take measures to mitigate money laundering risks when adopting new products or business practices and have specific policies, procedures and controls in relation to those products or practices
• They must ensure that any agents they use are similarly trained in anti-money laundering and counter terrorist financing procedures
• 5MLD clarifies what a reliable independent source is, when verifying an individual’s identity; and
• Introduces requirements for enhanced customer due diligence measures for:
  • High-risk countries
  • Complex or unusually large transactions
  • Unusual patterns of transactions
  • Transactions which have no apparent economic or legal purpose
  • Customers who are beneficiaries of life insurance policies
  • Customers who have received EU citizenship in exchange for a payment of capital, acquisition of property or government bonds, or investment in corporate entities in that EU state

The EU 6^th Money Laundering Directive (6MLD) is already well advanced and must be transposed into national law by EU states no later than 3 December 2020.  6MLD will introduce tougher punishments for money laundering offences and will broaden the scope of money laundering offences to include aiding, abetting and attempting to commit an offence.

It is highly likely that the UK will be required to adopt 6MLD during the Brexit transitional period.  In order to agree a favourable trade deal with the EU, AML is likely to be one area where legislation will need to remain aligned with the EU in future.  Anybody who thought that Brexit would cut the UK free from EU laws is likely to be disappointed with what the future really holds.