New rules, new rigour and soon

The final text of the Financial Services Authority’s Money Laundering Sourcebook is due to be published imminently. How will the new rules fit in with the existing 1993 Money Laundering Regulations and the Joint Money Laundering Steering Group (JMLSG) Guidance Notes for the Financial Sector? Timon Molloy attended a Euro Forum event in London recently to find out.

Several luminaries of the UK anti-money laundering establishment addressed delegates to the Euro Forum conference, held at the Waldorf Hotel in London at the end of November. What they had to say points the way to a busy year ahead. Michael Blair QC , who, until March of this year was General Counsel to the Board of the Financial Services Authority, and was closely involved in the drafting of Consultation Paper 46, the Draft Money Laundering Sourcebook, noted that the last, but by no means least, of the regulator’s four statutory objectives is to reduce the extent to which financial businesses may be used for financial crime.To this end it will possess prosecutor powers but also, which is new for a UK financial services regulator in respect of breaches of money laundering rules, disciplinary authority. Sam Stewart of Deloitte & Touche, who worked formerly for the Investment Management Regulatory Organisation (IMRO), noted later on in the day that in the past IMRO supervision teams would only really look into a firm’s money laundering prevention measures if they had covered everything else on their list. He observed that it would be difficult, though not impossible, under Personal Investment Authority (PIA) and IMRO rules to discipline authorised persons for deficiencies in controls on money laundering. However, all this will change under the new regime when monitor ing and penalties for breach of rules come into force. Mr Blair said he believed that the conference had been timed to coincide with publication of the final text of the FSA’s rules and he apologised that this was not yet available. However, when MLB pressed him to name a date he indicated that it would be in the next month or two but “whether a Christmas or Epiphany present” he would not like to say. He also commented that the FSA’s powers to implement and make money laundering rules might be activated in advance of other parts of the Handbook of Rules and Guidance since these were much less dependent on the Financial Promotions and Regulated Activities Orders that HM Treasury has yet to finalise. The current N2 date for full implementation of the Financial Services and Markets Act 2000 is July 2001 . Although he could not disclose the final text of the new rules, Mr Blair said he would not expect too many surprises in terms of changes to the MLRO role as it is defined in CP46.