Terence has over 35 years' experience in the Financial Services environment, covering general insurance, investments and mortgages.
It seems that Anti-Money Laundering (AML) directives are at bit like buses - you wait for ages and then you get three at once.
The third directive came into force in 2005 and then there was a long wait for number four which hit the statute books in 2017. We now have the fifth version which came into force in July 2018 and the sixth version which will be published shortly.
The fifth directive must be transposed into UK law by 20th January 2020 (as always, subject to any issues surrounding Brexit).
The fourth directive caused some confusion in the general insurance sector as it was unclear if any of it applied. The general insurance profession is not subject to the money laundering regulations, so the directive did not apply.
The fifth directive is more of a series of amendments to the structure of the fourth directive, adding various additional provisions that weren’t included in the text of 4AMLD. The main changes are focused on enhanced powers for direct access to information and increased transparency around beneficial ownership information and trusts. The fifth directive:
The sixth directive will focus on criminal offences and penalties.
Key changes expected in the sixth directive include:
At this stage, there is no specific commentary on how various sectors will be affected. Given the scope of the fifth directive and the fact that it is a series of updates to version four, there should be little for the general insurance broker to deal with.
The sixth directive is still in its early stage, and there may be some impact in other areas when this is published, such as the Proceeds of Crime Act and the Criminal Finances Act where we may see some harmonisation of definitions, sanction and penalties.
Whilst not immediately relevant to our general insurance clients, firms with IFA, mortgage or credit divisions may find this more useful.
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