06-07-2019

Part 2: Anti-Money Laundering

Section 49: Money laundering and terrorist financing etc

126.This section enables Ministers to make regulations about money laundering and terrorist financing. Further details of certain types of provision that can be made using these powers are given in Schedule 2, explained below. This section also enables Ministers to make regulations to implement the international standards set by FATF, an international body tasked with setting standards in this area, of which the UK is a leading member. Regulations made using this power will be subject to the draft-affirmative procedure except where it is used solely for the purpose of updating a list of high risk third countries in relation to which enhanced due diligence measures are required (which will be done by way of made-affirmative procedure, so that the enhanced due diligence requirements apply without any delay).

127.This section gives the appropriate Minister a legal power to make, amend and repeal secondary legislation relating to anti-money laundering and counter-terrorist financing after the UK ceases to be a member of the EU. The most recent major EU-wide reform of such legislation was the Fourth EU Money Laundering Directive 2015/849/EC (4MLD), which entered into force in June 2015. In June 2017, the UK transposed 4MLD into national law under powers conferred by section 2(2) of the European Communities Act 1972, by enacting the Money Laundering Regulations 2017. The power provided for in this section gives the appropriate Minister (following withdrawal from the EU) a legal power to amend domestic legislation transposing such EU law.

128.This power also ensures that the UK can continue to comply with the international standards set by FATF and address emerging risks relating to money laundering and terrorist financing. For these purposes money laundering and terrorist financing are defined by reference to existing statutory definitions set out in the Proceeds of Crime Act 2002; the Terrorism Act 2000; the Anti-terrorism, Crime and Security Act 2001; the Terrorist Asset-Freezing etc. Act 2010; and the ISIL (Da’esh) and Al-Qaida (Asset-Freezing) Regulations 2011.

Section 50: Reports on progress towards register of beneficial owners of overseas entities

129.This section requires the Secretary of State to publish and lay before Parliament three reports on the progress that has been made to put in place a register of beneficial owners of overseas entities. Each report is due after the expiry of a 12 month reporting period. The first period began upon Royal Assent. The first and second report must set out the steps that will be taken in the next reporting period towards putting the register in place and an assessment as to when the register will be put in place. The third and final report must include a statement setting out what further steps, if any, are to be taken towards putting the register in place.

Section 51: Public registers of beneficial ownership of companies registered in British Overseas Territories

130.This section requires the Secretary of State to provide all reasonable assistance to the governments of British Overseas Territories to enable them to establish publicly accessible registers of beneficial ownership of companies, and, no later than 31 December 2020, prepare a draft Order in Council requiring the government of any such Territory that has not introduced such a register to do so.