JMLSG publishes money laundering prevention advice

Amanda Jarvis

February 2, 2006

The revised JMLSG guidance will change the way that money laundering/terrorist financing risk is managed in the UK, affecting the way many firms operate and deal with customers.

The guidance will enable the UK financial services industry to take a sharper, risk-based approach to the international fight against financial crime.

Placing individual firms’ approach firmly on their senior management, it will:

– allow firms to focus their resources on the minority of customers who represent a higher risk
– reduce the documentation needed to verify the identity of non-personal customers
– simplify the document requirements by which most individuals have to ‘prove’ their identity
– encourage wider use of electronic means of verification of identity
– reduce unnecessary duplication of identity checks
– provide additional guidance, tailored to particular business areas, to take account of special features in a number of sectors

JMLSG has now submitted this industry guidance for approval by a treasury minister. Firms are likely to have to follow the guidance within six months from such approval. This transitional period will allow firms to implement changes in procedures, although some firms may do so more quickly. Firms should start planning now for the introduction of the guidance, and not wait for ministerial approval.

Ian Mullen, chairman of the JMLSG, said: “We have taken a radical approach. The new guidance reflects the reality most customers are neither money launderers nor terrorists. The guidance allows firms to counter money laundering and terrorist financing in a more proportionate, risk-based way, making better use of modern technology.

“The guidance has been subject to public consultation, and to further detailed discussion across a broad section of the industry, and with government, regulators and law enforcement.”

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