MLR1PP3050 - Penalties Guidance: Legislative background to this guidance

The Money Laundering Regulations 2007 came into force on 15 December 2007. These apply to:

• Money Service Businesses
• High Value Dealers
• Trust or Company Service Providers
• Accountancy Service Providers

The Transfer of Funds (Information on the Payer) Regulations 2007 also came into force on 15 December 2007. These Regulations only apply to Money Transmitters. The UK Transfer of Funds Regulations is complimentary to the European Payments Regulation and neither should be considered in isolation. The Transfer of Funds Regulations gives us the authority to issue penalties or prosecute businesses for breaches of the Payments Regulation. In other words there is an intrinsic link between the two.

Any reference in this guidance to the Payments Regulation or the Transfer of funds Regulations should be interpreted as meaning the appropriate sections of both sets of legislation. Unless we are referring to a specific Regulation in the UK legislation the generic term "Payments Regulation" has been adopted throughout this guidance to avoid confusion.

In a similar way we have adopted the generic term "Regulations" to cover all three sets of legislation where this is appropriate.

Also, all references to "money laundering" apply equally to money laundering and terrorist funding.

This guidance only applies to business activities which are supervised by us for the purposes of the Regulations.

The purpose of the Regulations is to ensure businesses employ a range of measures and controls to reduce the risks that, the business, or its clients, could be used by money launderers or terrorists.

The ultimate purpose of the controls is to deter and detect money laundering activity and report any suspicions to SOCA. The role of the business is effectively to police their customers and clients. Our role is to ensure that the controls businesses have in place meet the requirements of the Regulations. Adoption of a risk based approach by both businesses and our Compliance staff is essential to both processes.