Amendments to guidance following consultation

In response to the 29 June Consultation draft, 23 comment letters were received from firms, trade associations and regulatory authorities.

The new Guidance, as was noted when the Consultation draft was published, differs in a number of respects from the 2006 Guidance, although much of the detailed guidance remains the same. In particular:

  • Following a risk-based approach is now a legal requirement
  • New terminology/definition:
    • 'Customer' replaces 'applicant for business'
    • 'Customer Due Diligence' replaces 'Know Your Customer'
    • Beneficial owners of non personal business are defined
  • Simplified Due Diligence, and Enhanced Due Diligence, measures must be applied in specific situations 
  • Maintaining policies and procedures to identify PEPs, and monitoring customer activity, are now legal requirements 
  • Significant changes in respect of reliance arrangements have been introduced in the 2007 Regulations

The main areas where the June Consultation text has been amended in light of comments received, as well as after further discussion within the JMLSG Board, are:

  • Changes flowing from the final structure and content of the Regulations: 
    • Monitoring is no longer part of CDD measures; it has been separated out from CDD measures in order to make clear that it applies even when simplified due diligence is used
    • Greater definition of beneficial owners, particularly separating out those of trusts
    • Need for consent to be given for reliance
  • The transfer of responsibility for the UK sanctions regime from Bank of England to HM Treasury
  • Use of source of funds now an exception from standard CDD (as in 2006 Guidance) 
  • Fuller treatment of CDD measures on executors, personal representatives, Court of Protection appointments, and attorneys 
  • Material on beneficial owners of non personal customers expanded, and moved from the general text into the text on relevant non personal entities 
  • Greater consistency in presentation of standard CDD measures on non personal customers

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