This note is to alert all Money Service Businesses (MSBs) to HM Treasury’s new powers to issue directions under the Counter Terrorism Act which came into force on 26 November 2008.
What powers does HM Treasury have?
HM Treasury (HMT) may give a direction if one or more of the following apply:
• The Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities
• HMT reasonably believe that there is a risk of terrorist financing or money laundering activities and that this poses a significant risk to the national interests of the UK
• HMT reasonably believe that a country is involved in developing nuclear, radiological, biological or chemical weapons and that this poses a significant risk to the national interests of the UK
What does this mean for MSBs?
HMT could issue directions to all MSBs, or to some types of MSBs or to a particular business. This means that you must be ready to deal with these directions by training your staff and including how to deal with them in your anti money laundering systems.
How will I know a direction has been issued?
MSBs should sign up to Treasury’s email alert system at HM Treasury AML/CTF mailing list
What will I have to do?
Specific guidance will be issued with each direction and you will need to read the conditions imposed very carefully to find out what you need to do.
You will have to identify the customers or transactions that are affected and may need to carry out more detailed checks on them.
You may need to do one or more of the following:
• Carry out enhanced customer due diligence (see MLR 8 para. 7.12 (PDF 653K)). You would normally do this in high risk situations such as when the customer is a politically exposed person.
• Carry out ongoing monitoring of customers in a business relationship (see MLR 8 Part 9 (PDF 653K)). This is the kind of monitoring you would normally do in high risk situations.
• Report all transaction with these people and organisations. You may need to do this weekly.
• Cease business with certain people and organisations.
What if I have to cease business with certain people and organisations?
If this happens your customer or you can apply for a license to exempt them from this. HMT will provide further information on how to apply for licenses when they issue a direction.
Visit the BTC website for compliance help and support for firms in the regulated sector.