By Alexandra Marchant and Craig Weston.

Following feedback from industry and supervisors on the implementation of the Money Laundering and Terrorist Financing (Amendment) (EU Exit) Regulations 2020, HM Treasury is seeking views on amendments to the MLR 2017.

The aim is to ensure that the UK continues to meet international standards set by the Financial Action Task Force, as well as to ensure clarity on how the AML regime operates. The government has noted it’s aim to “ensure that the UK’s anti-money laundering and counter terrorist financing regime effectively deters money laundering and terrorist financing activity, whilst being proportionate and managing burdens on businesses”.

Areas that may be subject to the most significant changes include the art and cryptoasset markets.

Art market participants, which include any person who trades in ‘works of art’, have been AML regulated since the implementation of the EU Fifth Money Laundering Directive in early 2020. This wide-ranging definition includes individual artists who sell their pieces as part of their own business. Amendments to the MLR 2017 could potentially seek to exclude artists from the scope of the art market participation, taking into consideration the lower risk of money laundering and terrorist financing in this area.

On the other hand, views are currently being sought as to whether works of digital art, art which involves digital technology as part of the creative or presentation process, should now be covered by the MLR 2017. Currently digital art does not fall within the definition of sculptures, engravings, tapestries, ceramics, printed photographs, pictures, collages and paintings executed by hand.

Another major change that is perhaps on the horizon is a notable increase in the obligations surrounding cryptoasset exchanges and wallet providers operating within the UK. Under the changes, firms managing cryptoassets will be required to put in place processes to collect information on both the sender and receiver of funds, including names, addresses, account numbers and personal document numbers, for each transaction that is made. Information gathering requirements may also be more stringent where the transfer amount is over £1,000, and must be made available to the FCA, HMRC and the police on request.

The current consultation period will run between 22 July 2021 until 14 October 2021, and views will be taken forward through secondary legislation due to be laid in Spring 2022.

AML legislation in the UK is a live area for development and it is vital for regulated individuals and businesses to be familiar with any changes. If you would like more information on regulatory matters or are in need of specialist legal advice please contact Irwin Mitchell’s team here.