Money Laundering Regulations 2007

Money laundering is the process by which criminally obtained money or other assets (criminal property) are exchanged for money or assets with no obvious link to their criminal origins. In the hands of the thief or money launderer, the converted funds or other assets always represent criminal property. It also covers money, however come by, which is used to fund terrorism.

The aim of the Money Laundering Regulations 2007 (the Regulations) is to detect, deter and disrupt financial crime and terrorist financing by reducing the possibility of legitimate businesses being used for money laundering or terrorist financing.

The OFT supervises certain categories of business to ensure they are meeting their legal obligations regarding money laundering and terrorist financing. To comply with the Regulations businesses will need to register with the OFT.

Useful links

• Anti-money laundering home
• Anti-money laundering public register search
• Anti-money laundering general information
• Anti-money laundering registration form 

These pages outline our role and provide information for affected business.

You can also subscribe to alerts on money laundering issues via the OFT website. Subscribe to alerts on money laundering issues.

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Latest additions

• Download OFT Anti-Money Laundering Enforcement Principles (pdf 283kb)

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Does the OFT supervise my business?

The OFT is the supervisory authority for:

• Estate agents – those engaged in estate agency work as defined by Section 1 of the Estate Agents Act 1979. This includes residential and commercial estate agency and covers estate agents who represent either the seller or the buyer (relocation agents/property finding services). From the 1 October 2012 this includes an estate or interest in land outside the UK.
  
• Consumer Credit Financial Institutions (CCFIs) – a CCFI is someone carrying on consumer credit lending activity who is not authorised by the Financial Services Authority (FSA) or supervised by Her Majesty's Revenue and Customs (HMRC) as a money service business. From the 1 October 2012 very low risk lenders have been exempted from the Regulations these are businesses that provide consumer credit by giving customers time to pay for the provision of services which they themselves provide and the time to pay covers a period of 12 months or less. Services may include gym or golf club membership or veterinary services.

 Further information on whether you are supervised by the OFT can be found in Who is my supervisor FAQs (pdf 157kb).

It is the intention of the Regulations that, where possible, the businesses they cover will be regulated by only one supervisor in line with principles of good regulation. The Regulations recognise that there may be some business models that have more than one supervisory authority. Where it is appropriate, the supervisory authorities may agree who will take responsibility for either a particular business or category of businesses. Such businesses will then have to register only with the agreed supervisory authority. For OFT agreements with other supervisors covering individual businesses, see OFT Supervised Businesses transferred to another Supervisor (pdf 36kb).

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What do I have to do to comply with the Regulations?

If you are supervised by the OFT you need to:

1. Register with the OFT - see Registration page. 

2. Comply with the Regulations - a copy is available on the legislation.gov.uk website and the OFT implement policies and procedures including

• verification of customer identity and ongoing monitoring of business relationships
• keep records for five years from the end of the business relationship or, if an occasional transaction, the end of the transaction
• appoint a Nominated Officer
• implement risk based compliance policies and procedures, and 
• train staff in law and procedures.

3. Make Suspicious Activity Reports (SARs) as appropriate - a disclosure of either suspicion or knowledge that money laundering is or has taken place or that another person is engaged in money laundering activity.

If a business is submitting a SAR but wishes to proceed with the transaction it must seek 'consent' from the Serious Organised Crime Agency in order to proceed. This is done by ticking the relevant box on the SAR. 'Consent' has two purposes:

• it offers law enforcement agencies an opportunity to gather intelligence or intervene in advance of potentially suspicious activity taking place, and
• it allows individuals and institutions who make SARs to proceed with a 'prohibited act' and so avoid committing an offence by continuing with the business transaction.

Guidance on 'consent' is available on the SOCA website.

4. Sanctions and Jurisdictions of Concern - HM Treasury publishes Advisory Notices regarding the risks posed by unsatisfactory money laundering controls in a number of non EEA jurisdictions. Estate agents and CCFIs are required to apply enhanced customer due diligence and enhanced ongoing monitoring on a risk-sensitive basis in certain defined situations and in 'any other situation which by its nature can present a higher risk of money laundering or terrorist financing'. Therefore your risk assessment may need to take into account the information and advice detailed in the Advisory Notice regarding certain specified jurisdictions.

The current Advisory Notice is available at www.hm-treasury.gov.uk/d/financial_sector_advisory_notice.pdf

The Counter-Terrorism Act (the Act) came into force in December 2008 but the Act is unlikely to impact on many businesses supervised by the OFT. This Act provides HM Treasury with the ability to direct financial firms, including CCFIs, to undertake a graduated range of financial restrictions on business connected with jurisdictions of concern regarding money laundering and terrorist financing. For further information see the HM Treasury website or for a list of jurisdictions of concern see the HM Treasury website Newsroom and speeches page.

The Act is available on the legislation.gov.uk website.

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What guidance is available?

Download the OFT's Money Laundering Regulations 2007: core guidance (pdf 160kb). This guidance was developed with industry representatives from the estate agency and consumer credit sectors.

The Joint Money Laundering Steering Group (JMLSG) which is made up of industry trade associations has published guidance on businesses' legal obligations. This guidance is aimed at business in the financial sector and can be found on the JMLSG website.

The National Housing Federation has produced guidance for its members which has also been adopted by Community Housing Cymru, and the Northern Ireland Federation of Housing Associations. See National Housing Federation Guidance.

The National Federation of Property Professionals, in conjunction with the Royal Institution of Chartered Surveyors, the Association of Relocation Professionals and the Association of Residential Managing Agents, has produced guidance for members of these associations. See National Federation of Property Professionals money laundering guidance.

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How will I be supervised?

The OFT takes a risk based approach to supervision and will provide advice on compliance with the Regulations through the production of guidance, the provision of workshops and visits to businesses. Businesses that fail to put in place adequate anti-money laundering systems and controls may be subject to enforcement action including warning letters, civil financial penalties or prosecution for breaches of the Regulations. See 

• OFT Enforcement Principles (pdf 283kb) 
• Money Laundering Regulations 2007: Interim penalty policy (pdf 126kb) 

Under separate agreements, the OFT may share monitoring and enforcement powers with Local Authority Trading Standards Services (TSS). Even when agreements are not in place we will work with TSS and act on information of non-compliance that we receive. TSS already have the power to prosecute any supervised business for a breach of the Regulations.

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Also available

• Download The Money Laundering Regulations 2007 - OFT's response to HM Treasury's review (pdf 196kb)
• Download OFT Supervision under the Money Laundering Regulations 2007 - Report to HM Treasury 2010-2011 (pdf 246kb)
• Download Anti-Money Laundering: Future supervisory approach consultation (pdf 315kb)
• Download the OFT summary of responses (pdf 369kb) to its consultation.

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Further information

• The Third Money Laundering Directive is available on the Eur-Lex website
• Consumer credit licences and how to apply for a licence

If you have any questions about the OFT's role email amld3@oft.gsi.gov.uk or telephone us on 020 7211 8200.

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