Bribery, fraud and anti-money laundering | UK Regulatory Outlook July 2023
Published on 26th Jul 2023
Government proposes online fraud charter with tech platforms | UK government confirms corporate criminal liability regime expansion | PSR consultation for new APP scam reimbursement requirements
Government proposes online fraud charter with tech platforms
On 11 July 2023, the Home Office announced the development of an online fraud charter with the tech sector following a meeting of the Joint Fraud Taskforce.
The charter would ensure that tech companies take action to block scams, simplify the process of fraud reporting and ensure the quick removal of fraudulent content.
The security minister, Tom Tugendhat, also called on tech firms to implement stronger measures to tackle fraud on their platforms ahead of the introduction of the Online Safety Bill.
UK government confirms corporate criminal liability regime expansion
The new amendment will expand the scope of the "corporate criminal attribution" test to include senior managers who are deemed to represent the "controlling mind" of a company.
On 4 July 2023, the House of Lords completed the third reading of the bill, with consideration of Lords amendments to take place at a later date.
For further information, please see our Insight.
PSR consultation for new APP scam reimbursement requirements
On 7 July 2023, the Payment Systems Regulator (PSR) published its consultation on two of its draft directions aimed at implementing the new authorised push payment (APP) scam reimbursement requirements.
The PSR is seeking views on the legal means by which the new changes will be enforced, including:
- the rule changes needed to be applied within the Faster Payments System (FPS); and
- making sure Pay.UK, the operator of the FPS, has an effective monitoring regime to ensure payment firms are complying with the reimbursement requirements.
The closing date for this consultation is 25 August 2023. The draft general direction that will require all payment firms to reimburse victims of APP scams will be consulted on separately in October 2023.
The PSR is aiming to implement the new reimbursement requirements by 2 April 2024.
Treasury Committee publishes BoE's follow-up response regarding introducing mandatory reimbursement for APP fraud within CHAPS
Consultation published by Treasury on reforming AML and CTF supervision
On 30 June 2023, HM Treasury published a consultation on reform of the anti-money laundering (AML) and counter-terrorism financing (CTF) supervisory system, in line with a commitment in the Economic Crime Plan 2023-6. The consultation will close on 30 September 2023.
Currently, the AML/CTF supervisory system is made up of three statutory supervisors – the Financial Conduct Authority (FCA), the Gambling Commission and HMRC – plus 22 professional body supervisors (PBSs) who supervise the legal and accountancy sectors. The 2022 review of the UK's AML/CTF regulatory and supervisory regime concluded that, while there had been improvement to the regime, some weaknesses in supervision may need to be addressed through structural reform.
The review set out four possible models for a future AML/CTF supervisory system:
- Model 1: OPBAS+. The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) would be given enhanced powers to increase the effectiveness of supervision by the PBSs.
- Model 2: PBS consolidation. Either two or six PBSs retain responsibility for AML/CTF supervision, with either one accountancy sector supervisor and one legal sector supervisor, both with UK-wide remits, or one accountancy sector supervisor and one legal sector supervisor within each jurisdiction.
- Model 3: Single professional services supervisor. A single body to supervise all legal and accountancy sector firms for AML/CTF, which may also supervise some or all of the wider sectors currently supervised by HMRC.
- Model 4: Single AML supervisor. All AML/CTF supervision would be undertaken by a single public body.
The consultation, which does not include a policy preference, invites respondents' views regarding the potential benefits and disbenefits of each potential reform model.
Additionally, views are sought on whether to expand requirements on supervisors and their regulated populations relating to sanctions compliance.
New director of Serious Fraud Office appointed
On 5 July 2023, the attorney general, Victoria Prentis KC MP, announced the appointment of Nick Ephgrave QPM as the new director of the Serious Fraud Office (SFO).
Mr Ephgrave will replace the outgoing director, Lisa Osofsky, and take up the appointment at the end of September 2023 for an initial term of five years. Previously, he was chair of the National Police Chiefs' Council Criminal Justice Co-ordination Committee and was a former assistant commissioner of the Metropolitan Police Service.
The SFO is the non-ministerial specialist department that investigates and prosecutes serious or complex cases of fraud, bribery and corruption in England and Wales, and Northern Ireland.
HM Treasury approves revisions of JMLSG AML and CTF guidance
On 27 June 2023, the Joint Money Laundering Steering Group (JMLSG) published a press release announcing that it has received ministerial approval of the following revisions to Parts I and II of its AML/CTF guidance:
- Revisions published in March 2023: These include revisions relating to chapter 6 (Suspicious activities, reporting and data protection) of Part I and sector 22 (Cryptoasset exchange providers and custodian wallet providers) of Part II.
- Revisions published in November 2022: These relate to chapters 4 (Risk-based approach), 5 (Customer due diligence) and 7 (Staff awareness, training and alertness) of Part I.
The revised guidance is listed on, and accessible via, an updated version of the JMLSG's revisions webpage.
Delegated regulation amending list of high-risk third countries under MLD4 published in OJ
On 26 June 2023, Commission Delegated Regulation (EU) 2023/1219, which amends the list of high-risk third countries with strategic AML and CTF deficiencies produced under the Fourth Money Laundering Directive (MLD4), was published in the Official Journal of the European Union.
The new delegated regulation amends the list of third countries identified as having strategic AML and CTF deficiencies by:
- Adding Nigeria and South Africa.
- Removing Cambodia and Morocco.
It entered into force on 16 July 2023.
Updated HM Treasury advisory notice on ML and TF controls in high-risk third countries
On 26 June 2023, HM Treasury updated its Money Laundering Advisory Notice: High Risk Third Countries.
The Advisory Notice includes changes made by the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2023 (SI 2023/704) that came into force on 27 June 2023 and substituted the list of high-risk third countries specified in Schedule 3ZA of the Money Laundering Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 with a new list.
Cambodia and Morocco are no longer classed as high-risk third countries for the purposes of enhanced customer due diligence requirements, reflecting significant progress by these countries in addressing AML/CTF deficiencies.
The advisory notice identifies Albania, Barbados, Burkina Faso, the Cayman Islands, DPRK, Democratic Republic of the Congo, Gibraltar, Haiti, Iran, Jamaica, Jordan, Mali, Mozambique, Myanmar, Panama, the Philippines, Senegal, South Sudan, Syria, Tanzania, Turkey, Uganda, United Arab Emirates and Yemen as countries for which appropriate actions should be taken to minimise the associated risks; these actions may include enhanced due diligence in high-risk situations.
The following jurisdictions are subject to financial sanctions measures which require firms to take additional measures: Democratic Republic of the Congo, DPRK, Iran, Mali, Myanmar, South Sudan, Syria and Yemen.
Call to Action
Understanding who the "senior managers" may be within your organisation, who will now be deemed to represent the "controlling mind" of your business (under the proposed Economic Crime and Transparency Bill) and assessing how that impacts your corporate exposure and what you can do to "continuously improve" your systems and processes to mitigate that risk.