2022
2 revisions to the High Risk Countries List and new arrangements for Trusts.
Please refer to the current list of high risk countries in the "Links" tab above.
Some organisations may well take their time removing countries previously classified as "high risk" from their internal lists.
13 July 2021
The UK has added Haiti, Malta, the Philippines & South Sudan to the list of high risk countries, where EDD is required if any party (whether a client/customer or not) is established there.
Ghana has been removed from the UK list but remains on the EU list.
The legislation takes immediate effect.
24 August 2020
A tweak to the definition of "controlling interest" appears to have delayed implementation of the next set of changes to MLR 2017 by a week or so. If sifting is completed by 17 September and the revised Regulations laid in Parliament immediately then Implementation of the changes would be required from around 8th October 2020.
15 July 2020
HM Treasury has issued draft revisions to MLR 2017 which are scheduled to be laid before Parliament in early September and take effect from early October.
Much of the focus is on Trusts, although there are other aspects being addressed (eg the end of the EU departure transition arrangements).
Draft Amendments to MLR 2017 - September 2020
19 June 2020 - EU High Risk Countries Confirmation
EU High-Risk Countries confirmed as follows [see MLR 2017, Reg 33 1(b)]
From 10/1/2020 to 9/7/2020
Afghanistan, Bosnia and Herzegovina, Guyana, Iraq, Lao PDR, Syria, Uganda, Vanuatu, Yemen, Ethiopia, Sri Lanka, Trinidad and Tobago, Tunisia, Pakistan, Iran and Democratic People's Republic of Korea
From 9/7/2020 to 30/9/2020
Afghanistan, Iraq, Syria, Uganda, Vanuatu, Yemen, Trinidad and Tobago, Iran and Democratic People's Republic of Korea
From 1/10/2020
Afghanistan, The Bahamas, Barbados, Botswana, Cambodia, Ghana, Iraq, Jamaica, Mauritius, Mongolia, Myanmar/Burma, Nicaragua, Pakistan, Panama, Syria, Trinidad and Tobago, Uganda, Vanuatu, Yemen, Zimbabwe plus Iran and North Korea
NB Although not included within the EU Mandatory list, HM Treasury also recommended in February 2020 that Iceland and Albania be given consideration as high risk jurisdictions.
19 April 2020 - DRAFT GUIDANCE FROM JMLSG
The Joint Money Laundering Steering Group has issued draft guidance in response to the new 5MLD Money Laundering Regulations.
15 April 2020
Updated AML Advice to UK Legal Services
Risk Assessments for every regulated firm should be reviewed if policies and procedures are changing to reflect current circumstances, especially if greater use is being made of digital / electronic ID&V services (which must meet the new statutory requirements).
24 January 2020 - 5MLD for Trusts (or is it 5.5MLD?) HM Treasury appear to be addressing the big gap in the new AML Regulations.... Draft legislation included within the consultation ended on 21 February.
HM Government Consultation - 5MLD for Trusts
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December 2019
Should Conveyancers be concerned about how Brexit might affect Clients’ Insurance Policies?
There shouldn’t be anything to worry about, should there?
Everyone complies with the Insurance Distribution Directive, so how could there be a problem?
Let’s look at the situation from a typical purchaser where an insurance policy of whatever nature is required to protect them from various risks associated with the property and often feature a long or “in perpetuity” period of cover.
Insurance Distribution Directive
The first point is that their Demands and Needs might not have been addressed or considered too deeply. In all likelihood, the insurance has been provided after looking at the seller’s needs, and their requirements are quite different from the purchasers: they want to get the sale “over the finishing line”.
How is Brexit relevant?
Many insurance policies are underwritten (or “manufactured”) outside the UK, eg Ireland, Gibraltar or Luxembourg.
Will policyholders be protected by the FOS and the FSCS after 31 January 2020?
We will have to look at a few scenarios:
1. The original insurer was based in the UK – what could be the problem?
There shouldn’t be a problem unless the insurer is one of the companies that have transferred their business elsewhere within the EEA, in which case FSCS protection is only available for events which occurred prior tothat transfer.
The FOS has a similar position, but there is a warning which is relevant to all these scenarios that enforcement of any decision in favour of a client may not be straightforward, as this would need to occur outside the UK, even if the FOS decides in the client’s favour.
2. The Policy was issued by an EEA insurer before Brexit – that’s ok, isn’t it?
You would think so, wouldn’t you?
The FSCS has confirmed that they will continue to cover the original policy if it is still in place provided the insurer is still a “relevant person”.
Whilst most EEA insurers are expected to be recognised as a “relevant person” throughout the transition period in 2020, the FSCS recommends that you should check this with the insurer direct.
The position after the end of 2020 is, of course, completely uncertain.
If the insurer is no longer considered to be a “relevant person”, then it appears that FSCS protection would fall away.
The FOS’ position, put simply, is that if the firm was authorised to conduct business in the UK at the time the policy was issued then the complaint can be referred to them, but always noting the potential problem of enforcement.
3. What about a Policy issued by an EEA insurer during the Transition Period?
FSCS guidance starts to become a bit less clear on this point.
Depending upon the location of the branch of the insurer and its type of UK authorisation then the FSCS “may” provide protection and clarification should be sought from the insurer direct.
The FOS is clearer that if the insurer was approved to provide the insurance policy, then a complaint can be referred (but enforcement of their decision might still be an issue).
4. What if the policy is issued in Gibraltar?
Gibraltar has left the EU along with the UK. Current legislation allows – until the end of 2020 - for mutual recognition of firms based in the UK and Gibraltar and the FSCS provides protection.
The UK and Gibraltar are working together to agree a long-term arrangement to cover matters beyond 2020.
“So what does all this mean for us?”, I hear you ask!
Do the new SRA Professional Rules say anything about this?
In the new SRA Financial Services (Conduct of Business) Rules, section 21 deals with insurance policies.
The new Rules don’t specify whether they cover the arranging of insurance to a Purchaser, but we understand that the SRA intended that they be aligned only to the Insurance Distribution Directive.
However, whether a firm or an individual is governed by the SRA, CLC or both – the client’s best interests are a major priority.
Should I accept a policy for a Purchaser where the Insurer is based outside the UK?
You should think very carefully. Your firm might make a policy decision to only accept insurance policies which are provided by an insurer which is registered within the UK.
What about the policies that we arrange for Sellers?
If Purchasers start to insist upon UK insurers, you might be advised to check on where your recommended suppliers are based and consider switching to a UK-based insurer, if appropriate.