On 15 December, 2007, the Money Laundering Regulations 2007 will come into force. This article focuses on the new customer due diligence (CDD) requirements on the beneficial owner of the client. It considers relevant passages from the Law Society practice note on the regulations, for which the Law Society has applied for Treasury approval. If this approval is given, an English court will have to consider compliance with that guidance when assessing whether a criminal offence had been committedunder the regulations. However, a decision on such approval is not expected before spring next year.
As a preliminary matter, it is important to understand the general approach of the regulations. The regulations adopt a risk-based, proportionate approach to CDD. This recognises that there cannot be a ‘one size fits all’ approach to anti-money laundering processes. Rather, the steps that need to be taken in any given case will vary according to factors such as the nature of the client, its location and what the firm is being asked to do. The regulations themselves provide some assistance by detailing requirements for ‘simplified’ CDD and ‘enhanced’ CDD in certain situations. They also provide for ‘ongoing monitoring’ of the business relationship from a CDD perspective.
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