OFT publishes anti-money laundering guidance

151/07 1 November 2007

The OFT has today published guidance to business on their obligations under the new anti-money laundering regulations.

Download Money Laundering Regulations 2007: core guidance (pdf 160 kb).

The OFT will become a Supervisory Authority on 15 December 2007 when the regulations come into effect. Businesses supervised by the OFT are consumer credit lenders who are not authorised by the FSA and estate agents. Monitoring and enforcement powers will be shared with local authority Trading Standards Services (TSS) under arrangements to be negotiated in coming months.

The OFT's guidance alerts business to their obligations under the regulations, which are aimed at reducing their vulnerability to being used for money laundering. Firms are required to:

verify customers identity and nature of business before entering into business relationships or transactions
train staff in the procedures and laws relating to anti-money laundering
keep records of customer identity and business relationships for five years, and
report suspicious activity to the Serious Organised Crime Agency.

These regulations implement the Third Anti Money Laundering Directive and reflect the UK Government's strategy to combat money laundering and financing of terrorism. Sanctions for failure to comply with the regulations include civil penalties imposed by the OFT or prosecution resulting in fines or a prison term of up to two years.

Ray Hall, OFT Director of Markets and Projects, said:

'Our key aim at this stage is to ensure that businesses we supervise are aware of their obligations under regulations. Although these businesses already have to comply with anti-money laundering legislation until now they have not been supervised. We are happy to share monitoring and enforcement powers with local authority Trading Standards Services and will continue to work closely with them, to implement a supervisory regime which is effective.'

NOTES

1. The Money Laundering Regulations 2007 implement the Third Money Laundering Directive. The Regulations will come into force on 15 December 2007.

2. Estate agents and consumer credit firms are currently subject to the Money Laundering Regulations 2003. The OFT and TSS will take on supervision of these sectors under the Money Laundering Regulations 2007. The roles and powers of the OFT and TSS are set out in parts four and five of the new regulations, which can be found on the HM Treasury website.

3. The new regulations give the OFT the power to require firms to register with the OFT. A final decision on whether firms will be required to register with the OFT has not been made.

4. Current estimates of the number of firms that the OFT and TSS will supervise are 20,000 consumer credit lenders and 14,500 estate agents. Letting agents are not caught by the regulations.

5. The supervisory regime will be self-funding. The OFT has the power to charge fees to recover the costs of supervision by the OFT and TSS. Fee levels have not yet been decided.

6. The OFT is required to agree an enforcement approach with TSS, which will enable TSS to act as the OFT in monitoring and enforcement. Until such agreements are in place the OFT will be responsible for supervision.

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