On Monday, the British finance ministry unveiled proposals aimed at alleviating the burdens imposed by anti-money laundering (AML) regulations on banks, taking into account the post-Brexit landscape and the rise of novel financial ventures, including those involving cryptoassets.
Currently, these regulations mandate over 100,000 entities, ranging from banks to casinos, to perform diligent “know your customer” procedures to spot potential money laundering risks.
The necessity of these measures has been underscored by hefty fines imposed on banks for lapses in AML control systems, while some businesses have voiced concerns over being unjustly denied banking services due to perceived AML risks.
In a public consultation document released for feedback until June 9, the ministry expressed its intention to recalibrate AML regulations to be more accommodating for businesses and their clients without altering the monetary thresholds that necessitate due diligence.
Although the document steered clear of suggesting significant legislative overhauls, it hinted at possible refinements aimed at clarifying the application of existing rules, potentially easing the cautious approach banks often adopt.
A notable area of focus is the exploration of guidelines surrounding the digital verification of identities as part of AML protocols, contemplating whether new laws are necessary to support this initiative.
The paper highlighted the potential consequences of verification delays, such as hindered access to funds for customers of a collapsed bank during the transition to a new financial institution.
“The government is committed to actively encouraging and realising the benefits of digital identity technologies in the UK, without creating or mandating identity cards,” the document emphasized, reflecting a vision for modernizing identity verification without imposing identity cards.
Moreover, the ministry is deliberating the conversion of certain AML thresholds from euros to sterling, a move inspired by Britain’s departure from the EU.
The consultation also explores enhancements in information sharing among regulatory bodies like the Financial Conduct Authority to bolster efforts against financial crimes.
Highlighting the gravity of the situation, the UK’s National Crime Agency has estimated that criminal activities generate over £12 billion annually within the country, with money laundering potentially affecting the UK to the tune of hundreds of billions each year.