The UK Legislative Framework

Firms should be aware of the UK’s strategy document. ‘The financial challenge to crime and terrorism’, issued jointly by HM Treasury, Home Office, SOCA and the Foreign Office which sets out why it is important to combat money laundering and terrorist financing. The strategy document notes that the Government’s objectives are to use financial measures to:

  • Deter crime and terrorism in the first place – by increasing the risk and lowering the reward faced by perpetrators;
  • Detect the criminal or terrorist abuse of the financial system; and
  • Disrupt criminal and terrorist activity – to save lives and hold the guilty to account.

In order to deliver these objectives successfully, the government believes action in this area must be underpinned by the three key organising principles that were first set out in the 2004 AML Strategy

The Governments published strategy (UK Anti-Money Laundering Strategy 2004) is based on three objectives: 

  • Effectiveness – making maximum impact on the criminal and terrorist threat:
    a. Build knowledge of criminal and terrorist threats to drive continuous improvement
    b. Make the best use of the financial tools we have, by making sure that all stakeholders make  the maximum use of the opportunities provided by financial tools, including those to recover criminal assets
  • Proportionality – so that the benefits of intervention are justified and that they outweigh the costs:
    a. Entrench the risk-based approach
    b. Reduce the burdens on citizens and business created by crime and security measures to the minimum required to protect their security
  • Engagement – so that all stakeholders in government and the private sector, at home and abroad, work collaboratively in partnership:
    a. Work collaboratively across the AML/CTF community, including to share data to reduce harm
    b. Engage international partners to deliver a global solution to a global problem

It is with this strategy in mind that the following legislation and regulation has been developed to form the framework for the nations approach to the prevention and detection of money laundering and the combating the financing of terrorism.