On 22 June 2017, the government published the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. The new Regulations came into force on Monday 26 June 2017 after a short period of consultation, with the Government claiming a cost to the UK of £24bn annually because of serious and organised crime.
We asked Partner Simon Harris of the importance of these new rules and how, three months after launch, they are impacting day-to-day operations at ReSolve:
Q: Were these changes expected?
SH: Many of them have been in discussion for some years but the perceived increase in terrorist activity across Europe has undoubtedly focused the minds of treasury enforcement agencies. The rules have pushed greater obligations on checks and assessments onto the financial services industry to ensure money changing hands is from a legitimate source and will not be used to fund criminal and/or terror acts. The implementation was pushed through quickly and that does have implications.
Q: What impact do they have on day to day activity?
SH: We are a compliance-heavy industry, so undoubtedly, any new introduction of rules creates new processes and takes up time. We have also had to consider systems implications so we can be consistent in the implementation of the new processes as well as reviewing our whole client base. There has been good guidance which we have shared internally and there seems to be a pragmatism from regulators on how the changes are rolled out. As you can imagine it is not a small task but we have embedded implementation of the rules into our new project work whilst we review our existing base.
Q: Is there more we can be doing to assist the Government in restricting the funding of terror acts?
SH: At ReSolve we are actively developing our services in this area and believe the whole area around cyber terrorism and money laundering is a core due diligence issue when assessing any transaction or assignment. There is still an education job to be done in the industry so the more we engage in active discussion, the better. The good news is there is no resistance to the changes and associated guidance and key players are taking it seriously.
Q: Any parting advice for firms in this sector.
SH: The burden of compliance and regulation is not going to go away anytime soon. It is best to think of it like airport security – if you want to catch your flight you have to pass through security, it cannot be avoided. It’s as simple as that. You cannot take off on an assignment or transaction unless you have completed all the necessary security checks.