FATF has published its highly anticipated report on the effectiveness of the UK’s anti-money laundering and counter-terrorist financing measures.
On 7 December 2018, the Financial Action Task Force (FATF) published its highly anticipated mutual evaluation report of the UK. The report sets out the UK’s global standing in combatting money laundering and terrorist financing. The report is generally positive, ranking the UK as either highly or substantially effective in its fight against money laundering and terrorist financing in the majority of areas. The report does, however, highlight some concerns about the UK’s approach, particularly in relation to the Suspicious Activity Reporting (SAR) regime, the utilisation of financial intelligence, and the FCA’s role in the supervision of firms’ compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) rules.
The UK’s last FATF evaluation took place in 2007 and in light of recently heightened sensitivities around money laundering, the government was motivated to ensure that the UK maintained its status as a global financial centre with robust tools to combat financial crime. The report summarises the FATF’s analysis, based on its on-site visit in March 2018, of the UK’s compliance with the FATF 40 Recommendations and the effectiveness of the UK’s AML and CTF regimes. It also provides recommendations as to how those systems can be strengthened.
The report is largely positive and states that the UK:
- Has a robust understanding of the money laundering and terrorist financing risks to which it is subject.
- Proactively investigates, prosecutes, and convicts a range of money laundering and terrorist financing activity, securing approximately 1,400 convictions a year for money laundering offences.
- Has improved its legal framework since the 2007 evaluation by implementing the People with Significant Control (PSC) Register to aid enforcement agencies, regulators and businesses in identifying the ultimate beneficial owners of UK-incorporated companies.
- Ensures that all entities within the FATF definition of “financial institution” (e.g., banks and regulated investment firms) and “Designated Non-Financial Business Professionals” (e.g., lawyers and accountants) are subject to appropriate AML and CTF rules and are supervised for compliance with those rules.