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Government consult on extending AML rules

Thursday 25 April 2019

On 15 April 2019, the UK Government launched a consultation on extending the anti-money laundering rules as set out in the Fifth Money Laundering Directive (5MLD).

The 5MLD, which was passed by the European Parliament in June 2018 makes amendments to the Fourth Money Laundering Directive (4MLD) which came into force on 26 June 2017. The requirements of 5MLD must come into effect through UK law by 10 January 2020.

The latest Directive contains amendments to 4MLD with the aim of improving transparency and the existing preventative framework to more effectively counter money laundering and terrorist financing across the European Union. 

New obliged entities

Tax advisors – the government will expand the definition of “tax advisor” to include firms and sole practitioners who by way of business provide, directly or by way of arrangement with other persons, material aid, assistance or advice about the tax affairs of other persons.

Letting agents – 5MLD expands the scope of obliges entities within the property sector to include the letting agency sector for high value transactions with a monthly rent of 10,000 Euros or more.

Cryptoassets (virtual currencies) – Under 5MLD requirements for cryptoasset exchanges and custodian wallet providers for the first time. 

Art intermediaries – are already regulated for AML/CTF purposes if they are classified as high value dealer under the Money Laundering Regulations. 5MLD expands the scope of obliged entities to include art intermediaries for transactions exceeding 10,000 Euros, including art galleries, auction houses and free ports.

Electronic Money

Electronic money or e-money is an electronic store of monetary value on a device (such as a prepaid card) that may be widely used for making payments and value transfers, which does not necessarily involve the bank account transactions. 5MLD reduces the thresholds above with Customer Due Diligence must be applied, meaning e-money firms will have to conduct Customer Due Diligence measures on a greater proportion of transactions.

Customer Due Diligence

5MLD sets out the circumstances under which secure, remote or electronic identification processes may be considered in undertaking customer due diligence. The Government is seeking views on the need for additional clarification in the regulations as to what constitutes ‘secure’ electronic identification processes, or whether details of this should be set out in guidance.

Beneficial Ownership Requirements

5MLD introduces further changes to requirements for obliged entities on verifying the identities of customers or beneficial owners.

There is also a requirement for Member States to ensure that information on the beneficial ownership of corporate and other legal entities is accessible by members of the general public.

Enhanced Due Diligence

In order to harmonise Enhanced Due Diligence in relation to high-risk third countries (as identified through the EU listing process), 5MLD sets out a series of requirements for Member State and their obliged entities. This includes expanding the scope of persons on whom obliged entities must conduct Enhanced Due Diligence from ‘natural persons or legal entities established in the third countries’ to ‘business relationships or transactions involving high-risk third countries.’

Politically Exposed Persons

Whilst 5MLD does not make any changes to the requirements contained in the existing regulations in relation to approach firms must use to identify and conduct due diligence on Politically Exposed Persons, the FCA have identified through guidance UK functions that should be treated as prominent public functions. 

Trust Registration Service

5MLD expands the scope of this register by requiring trustees or agents of all UK and some non-EU resident express trusts to register those trusts with the Trust Registration Service set up by HMRC, whether the trust has incurred a UK tax consequence. It also requires the government to share data from the register with a range of persons under certain circumstances.

National register of bank account ownership

5MLD requires the UK to establish a centralised automated mechanism – such as a central registry or electronic data retrieval mechanism – which allows identification of natural and legal persons which hold or control bank accounts; payment accounts; or safe-deposit held by credit institutions within the UK.

Professional Body Supervisors

4MLD is amended so that all self-regulatory bodies shall publish an annual report containing information on their supervisory activity, such as the number of supervisory visits and enforcement actions undertaken in the preceding year. 

Pooled client accounts

The Money Laundering Regulations require banks to conduct Customer Due Diligence on their customers. The consultation asks that if the framework for pooled client accounts was extended to non-MLR regulated businesses, what Customer Due Diligence obligations should be undertaken. 


The UK Government want to amend the rules so that the FCA or HMRC to publish written notices related to AML failings registration. 


The Government have said that this consultation will play a key role in deciding how best to transpose 5MLD into UK law and will manage the burden on business, with the need for regulated businesses to actively discourage money laundering and terrorist financing activity.

The full list of questions and proposals can be found here Transposition of the Fifth Money Laundering Directive consultation.  The closing date for comments to be submitted is 10 June 2019.

To have your say in the consultation you can either email your views to NAEA Propertymark or submit them directly here.

Propertymark resources

To help agents understand the changes proposed under the 5MLD and the Tenant Fees ban they can attend one of Propertymark’s Roadshow events. To book or to find out more information visit our lobbying page here.