Business sectors that need to comply with anti-money laundering regulation

Under UK law, the Proceeds of Crime Act 2002 (POCA) sets out the framework for tackling money laundering and the handling of criminal proceeds. Certain business sectors must register with supervisory bodies and comply with anti-money laundering (AML) regulations. These sectors are defined under the UK's Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.

The following sectors are required to register under UK law:

1. Financial Institutions:

• Banks and Building Societies: Must comply with strict AML obligations, including customer due diligence, transaction monitoring, and reporting suspicious activities.
• Credit Institutions: Non-bank financial institutions that offer credit services are also included.
• Payment Institutions: Providers of payment services, including money transfer services, must register and comply with AML requirements.

1. Accountants, Auditors, and Tax Advisors:

• Professionals providing accountancy or tax services are required to register and follow AML compliance rules, including identifying and reporting suspicious transactions.

1. Legal Professionals (Solicitors and Lawyers):

• Legal professionals who engage in activities such as real estate transactions, managing client money, or creating companies are subject to AML regulations and must report suspicious activities to the UK’s National Crime Agency (NCA).

1. Estate Agents and Letting Agents:

• Both residential and commercial estate agents are covered. Letting agents also need to register if they deal with monthly rents over £10,000.

1. Trust and Company Service Providers:

• These include firms that create, manage, or advise on trusts, foundations, or companies. They must be registered with a supervisory body and adhere to AML laws to ensure they are not used for money laundering purposes.

1. High-Value Dealers:

• Businesses that manage cash payments of €10,000 or more (or equivalent in any currency) must register as high-value dealers. This can include businesses dealing in luxury goods, such as:
  • Precious metals or stones
  • Art and antiques
  • Cars and other high-value items

1. Gambling Businesses:

• Casinos (both online and physical) are required to comply with AML regulations, given the risk of large sums of money being laundered through gambling. Other gambling businesses such as betting shops are subject to oversight, depending on their activities.

1. Cryptoasset Businesses:

• From 2020, businesses involved in crypto assets, such as cryptocurrency exchanges and wallet providers, must register with the Financial Conduct Authority (FCA) and comply with AML regulations, including customer due diligence and transaction monitoring.

1. Money Service Businesses (MSBs):

• These include currency exchange services, money remittance businesses, and cheque cashing businesses. They are regulated by HM Revenue & Customs (HMRC) and must register and comply with AML laws.

1. Insurance Intermediaries:

• Those involved in life insurance and other investment-related insurance products must comply with AML rules, ensuring they do not facilitate money laundering.

In the UK, these sectors must register with their appropriate supervisory authority, such as the FCA, HMRC, or a relevant professional body. They are required to implement measures such as customer due diligence (CDD), enhanced due diligence (EDD) for high-risk customers, transaction monitoring, and suspicious activity reporting to prevent money laundering. Non-compliance can lead to significant penalties, including fines and potential criminal charges.

The primary supervisory bodies include:

• Financial Conduct Authority (FCA): Supervises financial institutions and cryptoasset businesses.
• HM Revenue & Customs (HMRC): Supervises money service businesses, high-value dealers, estate agents, and certain other sectors.
• Legal and Accountancy Professional Bodies: Various bodies like the Law Society and Institute of Chartered Accountants in England and Wales (ICAEW) oversee legal and accounting professionals.

Penalties

 There are substantial penalties if organisations that should be registered do not register, or that observe the regulations and reporting requirements in a half-hearted manner.