Obligations and good practice in the regulated sector

The fight against money laundering and terrorist financing depends on close co-operation with the authorities by those who may, however unwittingly, handle on behalf of criminals large sums of money or other valuable property. They include, among many others, banks and other financial and credit institutions; lawyers, auditors, insurers and estate agents; dealers in precious metals and precious stones; and casinos. These constitute the private regulated sector.

Regulations, in particular the Money Laundering Regulations 2007, aim to limit the use of professional services for money laundering by requiring professionals to know their clients and monitor the use of their services by clients. They achieve this by imposing reporting obligations on those within the regulated sector and by setting administrative requirements for the anti-money laundering/counter terrorist financing regime within the regulated sector.

Those businesses that fall within the regulated sector are required to establish procedures to:

• Apply customer due diligence procedures
• Appoint a Money Laundering Reporting Officer (MLRO) to whom reports must be made
• Establish systems and procedures to forestall and prevent money laundering and terrorist financing
• Provide relevant individuals with training on money laundering/terrorist financing and awareness of their procedures in relation to the same.

The purpose of this section is to:

• Outline the legal obligations imposed on those within the regulated sector within the UK
• Outline good practice on implementing the legal requirements
• Outline good practice in developing systems and controls to prevent those within the regulated sector being used to facilitate money laundering and terrorist financing
• Provide information on applying the risk-based approach to compliance effectively