Regulation Name: Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024
Regulatory Update Date: 22 January 2024
Country:  United Kingdom
Agency: His Majesty’s Treasury (HMT)

On January 22, 2024, the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024, a statutory instrument (SI), was published along with an explanatory memorandum. This SI has significant implications for the regulation of high-risk third countries (HRTCs) in the context of money laundering and terrorist financing.

The primary objective of the SI is to modify regulation 33(3)(a) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). Specifically, it redefines “high-risk third countries” as those identified by the Financial Action Task Force (FATF) in its published lists, specifically the “High-Risk Jurisdictions Subject to a Call for Action” and “Jurisdictions Under Increased Monitoring.” Additionally, the SI eliminates Schedule 3ZA to the MLRs, which previously outlined the list of high-risk third countries requiring extra customer due diligence measures.

The changes introduced by the SI aim to streamline the process of updating HRTCs, necessitating enhanced due diligence by regulated businesses. Instead of maintaining a separate schedule in the MLRs, the SI directly refers to the FATF lists. This adjustment eliminates the need for up to three statutory instruments annually to align the UK’s list of HRTCs with the FATF lists.

The explanatory memorandum underscores the efficiency gained by directly referencing the FATF lists, as it obviates the necessity for frequent statutory updates. The SI came into force on the same day it was published, marking January 23, 2024.

The legal authority for these regulations is derived from the powers conferred by section 49 of the Sanctions and Anti-Money Laundering Act 2018, along with paragraphs 4 and 23 of Schedule 2 to the same Act. Notably, the definition of “terrorist financing” in section 49 underwent amendment through the Sanctions and Anti-Money Laundering Act 2018, as did section 55 and Schedule 2, paragraphs 4 and 23, through the Economic Crime and Corporate Transparency Act 2023.

The regulations, known as the Money Laundering and Terrorist Financing (High-Risk Countries) (Amendment) Regulations 2024, came into force on January 23, 2024, and apply to England and Wales, Scotland, and Northern Ireland.

In terms of specific amendments to the MLRs, regulation 33(3)(a) now references countries named on the FATF lists, eliminating the previous reliance on Schedule 3ZA. The omitted schedule had previously detailed high-risk third countries requiring enhanced due diligence.