Money Laundering Regulations 2007

Money laundering is the process by which criminally obtained money, or other assets (criminal property), are exchanged for clean money or assets with no obvious link to their criminal origins. It also covers money, however come by, which is used to fund terrorism.

The Money Laundering Regulations (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 in the future 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. 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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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)
  
• 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.

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What do I have to do if my business is a CCFI or engages in estate agency?

If you are supervised by the OFT you need to:

1. Register when the registration period opens in late July 2009 - see Registration page

2. Comply with the Regulations - a copy is available on the OPSI website and

• confirm customer identity and ongoing monitoring of business relationships
• keep records for 5 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.

The Counter-Terrorism 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.

The Act is available on the OPSI website.

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What guidance is available?

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

Download Information summary for estate agents and CCFIs (pdf 65 kb). This information summary is not intended to be a substitute for the core guidance but to provide estate agents and CCFIs with a brief overview.

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.

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How will the OFT supervise?

Our supervision will focus initially on raising levels of awareness, encouraging and helping business to reduce the risks of being used for money laundering and terrorist financing.  However, we have powers to take prosecutions and to impose civil financial penalties for breaches of the Regulations against those businesses that fail to put in place the anti-money laundering systems and controls. Further information on how we will use our powers will be available shortly.

In the future Local Authority Trading Standards Services (TSS) may share monitoring and enforcement powers with the OFT under agreements yet to be negotiated. 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.

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Further information

• Who is my supervisor FAQs
  The Third Money Laundering Directive is available on the Eur-Lex website
• Estate agency and the Estate Agents Act 1979
• 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 08457 22 44 99.

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