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 Money Laundering Regulations 2007 (the Regulations) came into force on 15 December 2007. Their aim is to detect, deter and disrupt financial crime and terrorist financing by reducing the possibility of legitimate businesses being used for money laundering.
To comply with the Regulations, certain categories of business will need to register with the OFT. The OFT will then supervise these businesses to ensure they are meeting their legal obligations regarding money laundering.
These pages outline our role and provide information for affected business or you can see our Registration page.
You can also subscribe to alerts on money laundering issues via the OFT website. Subscribe to alerts on money laundering issues.
The OFT is the supervisory authority for:
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).
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
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:
Guidance on 'consent' is available on the SOCA website.
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.
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 Core Guidance (OFT 954) on the Money Laundering Regulations (the Regulations) issued in 2007 has been amended to include relevant information on the Counter Terrorism Act 2008 and its impact on the Regulations. For more information on the Counter Terrorism Act 2008 see the legislation.gov.uk website.
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.
In addition some trade associations have also published guidance for their members on their obligations under the Regulations.
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 Property 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.
Our supervision has focused initially on raising levels of awareness, encouraging and helping business to reduce the risks of being used for money laundering and terrorist financing. However, businesses that fail to put in place anti-money laundering systems and controls may be subject to civil financial penalties or prosecution for breaches of the Regulations.
The OFT consulted on its future supervisory approach to AML and has now published the summary of responses (pdf 369kb). This document summarises the responses received by the OFT to its consultation on the most appropriate future supervisory approach and fee structure that the OFT should adopt in its role as a supervisory authority under the Regulations. It had been the OFT's intention to include the response to the consultation within the summary of responses (pdf 369kb), outlining the OFT's future supervisory approach. However, a number of factors have caused a change to this approach and delayed publication of this. Not least of these factors are the proposed changes to the wider regulatory landscape which are subject to wider consultation by the Government. In addition the OFT needs to identify the scope for efficiencies, and we need to follow Government rules regarding the freezing of recruitment.
All businesses who are supervised by the OFT need to register with the OFT under the Money Laundering Regulations 2007 - see registration page.
The OFT has adopted an interim penalty policy for trading while unregistered (Money Laundering Regulations 2007: Interim penalty policy (pdf 126kb)) to take action against supervised traders who have failed to register. This interim penalty policy has been developed pending the development and implementation of a full policy. This full policy will cover all of the breaches of requirements under the Regulations and has taken account of the views expressed in response to the recent consultation. As a full policy is likely to take some time to develop, the OFT is implementing an interim policy to deal specifically with the issue of businesses trading whilst being unregistered. The full policy will be published when it is implemented.
More detailed information on how we will use our powers will be published as these are developed.
In the future Local Authority Trading Standards Services (TSS) may share monitoring and enforcement powers with the OFT under agreements yet to be negotiated. As detailed in the response to the consultation, the TSS are not currently able to agree to taking on a shared role. The OFT has been working with some individual authorities in piloting different models of working together and hopes that the results of this activity will help identify cost effective and efficient ways of future working. Until any such arrangements are in place the OFT will be solely responsible for supervision although we will continue to work with TSS and act on information of non-compliance that we receive.
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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