Regulated firms in the UK’s banking, lending, wealth management and estate agents sectors are only 55 per cent of the way through their implementation plans for the European Union’s Fifth Money Laundering Directive (5MLD) according to new research from global data and analytics provider LexisNexis Risk Solutions.
Firms not fully complying with the directive, which came into force on 10 January 2020, may face hefty fines from the UK’s Financial Conduct Authority (FCA).
Of the financial professionals surveyed by LexisNexis, fewer than half of respondents were able to correctly identify either that 5MLD was brought in to prevent the financial system being used for the funding of criminals (47 per cent) or that its purpose is to strengthen transparency rules to prevent large-scale concealment of funds (43 per cent).
Just 39 per cent of professionals in the banking sector – arguably the sector with the biggest role to play in keeping illicit funds out of the system – identified 5MLD’s correct purpose.
New regulated sectors
Sectors that have not been regulated under previous EU money laundering directives are included in 5MLD.
New business sectors covered by the legislation are letting agents, art market participants (including operators of freeports), and providers of exchange or storage services for ‘crypto-assets’.
‘It’s no big surprise that firms aren’t yet fully compliant with 5MLD,” according to director of financial crime compliance at LexisNexis, Michael Harris.
But he says he is disappointed that so many are so far behind and that firms appear not to be prioritising the legislation given the impact it can have on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing.
Categories: Trade Based Financial crimes News