The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, No. 692 (as amended)

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, often referred to as MLR 2017, are a set of regulations implemented in the United Kingdom with the primary objective of combating money laundering and the financing of terrorism.

The key purpose of MLR 2017 is to establish a robust framework for preventing illicit funds from entering the financial system and to detect and report suspicious financial activities. These regulations play a crucial role in maintaining the integrity and security of the UK's financial sector.

Requirements:

1. Customer Due Diligence (CDD): MLR 2017 mandates that businesses subject to these regulations must perform thorough due diligence on their customers. This includes verifying the identity of customers, understanding the nature of their business, and assessing the risk associated with the business relationship.
2. Enhanced Due Diligence (EDD): For high-risk customers or transactions, enhanced due diligence measures must be applied. This involves obtaining additional information and conducting more comprehensive assessments.
3. Record Keeping: Businesses covered by MLR 2017 are required to maintain detailed records of customer identification, transaction histories, and due diligence measures for a specified period.
4. Reporting Obligations: Suspicious Activity Reports (SARs) must be filed with relevant authorities when businesses have reasonable grounds to suspect that a transaction may be linked to money laundering or terrorist financing.
5. Risk Assessments and Policies: Companies subject to MLR 2017 must conduct periodic risk assessments to evaluate and mitigate the risks of money laundering and terrorist financing. They must also develop and implement appropriate policies and procedures to address these risks.

The regulations apply to a wide range of businesses and professions, known as "regulated entities," that are involved in financial activities and services. This includes but is not limited to:

1. Financial Institutions: Such as banks, credit unions, and building societies.
2. Payment Institutions and E-Money Institutions: Entities involved in money transfers and electronic money issuance.
3. Trust or Company Service Providers: Those providing services related to trusts and corporate structures.
4. High-Value Dealers: Businesses dealing in high-value goods or conducting high-value transactions, including dealers in precious metals, art, and real estate.
5. Estate Agents: Involved in property transactions.
6. Legal Professionals and Accountants: In specific circumstances where they provide services related to financial transactions.

It is crucial for businesses falling under the scope of MLR 2017 to be fully compliant with these regulations to prevent financial crimes and contribute to the overall security of the financial system. Non-compliance can lead to severe penalties and legal consequences.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) in the United Kingdom stipulate specific evidence requirements to ensure compliance with anti-money laundering and counter-terrorist financing measures. These requirements are crucial for regulated entities to demonstrate due diligence and transparency in their financial transactions. Here is a summary of the evidence requirements under MLR 2017:

1. Customer Identification: Regulated entities must obtain and verify the identity of their customers. This includes individuals, legal entities, and beneficial owners; For individuals, evidence may include a valid passport, national ID card, or driver's license. For legal entities, it may include certificates of incorporation and articles of association; and Beneficial ownership information must be collected to identify the individuals who ultimately own or control a legal entity.
2. Verification of Identity: Regulated entities must use reliable and independent sources to verify the information provided by customers. This may involve electronic identity verification services, government databases, or official documents.
3. Verification of Beneficial Ownership: Evidence should be gathered to confirm the identity of beneficial owners, including details such as name, date of birth, nationality, and residential address; and Documentation may include share registers, shareholder agreements, or other official records.
4. Risk Assessment Documentation: Regulated entities must maintain records of their risk assessments, including the evaluation of the customer's risk profile and the associated risk level; and This documentation helps in determining the appropriate level of due diligence required for each customer.
5. Enhanced Due Diligence (EDD): When dealing with high-risk customers or situations, regulated entities must gather additional evidence to establish the customer's identity and the nature of their business; and This may include source of funds documentation, business plans, and references from reputable sources.
6. Ongoing Monitoring: Evidence should be retained to demonstrate that ongoing monitoring of customer relationships is being conducted. This includes transaction records, correspondence, and any relevant changes in the customer's circumstances.
7. Record Keeping: All evidence and documentation related to customer due diligence must be retained for a minimum period specified by MLR 2017 (usually at least five years).
8. Suspicious Activity Reports (SARs): In cases where suspicious activities are identified, regulated entities must maintain records of the decision-making process leading to the filing of a Suspicious Activity Report.
9. Training and Competence Records: Regulated entities should maintain records demonstrating that their staff members have received appropriate training in anti-money laundering procedures and are competent to carry out their responsibilities.
10. Policies and Procedures Documentation: Evidence of the existence and implementation of internal policies and procedures designed to ensure compliance with MLR 2017 should be kept on record.

Adhering to these evidence requirements is crucial for regulated entities to demonstrate compliance with MLR 2017 and to contribute to the prevention of money laundering and terrorist financing activities. Non-compliance can lead to significant penalties and legal consequences.