As we kick off the new year, APLYiD, a leading identity verification company, is navigating through changes in the regulatory landscape. Beyond just staying compliant, we're keeping you informed about recent updates to the Money Laundering, Terrorist Financing, and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2023/1371). Let's break down what this means, especially regarding politically exposed persons (PEPs) and 2024.
Key Changes and When They Take Effect:
The Money Laundering and Terrorist Financing (Amendment) Regulations 2023, known as SI 2023/1371, officially came into force on January 10, 2024. These regulations apply across the United Kingdom, covering England and Wales, Scotland, and Northern Ireland.
What's New for Politically Exposed Persons:
A crucial aspect of the updated regulations focuses on enhanced customer due diligence for politically exposed persons (PEPs), especially domestic PEPs. Domestic PEPs, their family members, or close associates are now considered to present a lower level of risk than their non-domestic counterparts. This change aims to simplify compliance for regulated entities, encouraging a more risk-based approach. If no additional risk factors are identified, the required customer due diligence measures for domestic PEPs will be less stringent than those for non-domestic PEPs.
Clear Definitions and Explanations:
The amended regulations introduce essential definitions to help everyone understand the changes. A "domestic PEP" refers to a politically exposed person entrusted with prominent public functions by the United Kingdom. On the other hand, a "non-domestic PEP" is a politically exposed person who doesn't hold such a position within the UK. The term "enhanced risk factors" encompasses risks beyond an individual's status as a domestic PEP, family member, or close associate.
Official Recognition and Next Steps:
Signed by Scott Mann and Amanda Solloway, two Lords Commissioners of His Majesty’s Treasury on December 13, 2023, these amendments go beyond mere administrative changes. They mark a strategic shift in AML compliance, recognising and addressing the unique risks associated with domestic PEPs.
Explanatory Note Simplified:
The accompanying explanatory note offers insights into the purpose behind these amendments. The main goal is to align with section 77(3) of the Financial Services and Markets Act 2023, ensuring that domestic PEPs are treated as lower risk during assessments under regulation 35(3). This underscores the importance of a balanced approach to AML compliance, considering stringent measures while maintaining a realistic understanding of risk levels.
APLYiD's Proactive Approach:
Looking ahead, APLYiD is committed to providing identity verification solutions that go beyond mere compliance. Our tailored solutions are designed to meet the changing needs of the regulatory landscape. The amended AML regulations, coupled with the proposed supervisory system reforms, reinforce APLYiD's commitment to excellence, compliance, and innovation. In the dynamic world of AML, APLYiD isn't just adapting to change – we're leading the way.
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