Having last week been accused of (or congratulated on – I couldn’t quite tell) being political, I thought I might as well go with the flow. About three weeks ago I was doing some training in London, talking about the Fourth Directive, and someone asked what would happen when (not if, but when– they seemed jolly certain about it) we leave the EU. Now I am not going to say whether I support Brexit or not, mainly because my view does not count one jot beyond my one little vote, but it is interesting to ponder what might happen in the world of AML.
If the UK leaves the EU, it will no longer be obliged to comply with EU legislation – including MLD4. But of course the UK will still want to participate in global financial markets, and will still be a member of the FATF, and so it will want to comply with international standards on AML, which is basically MLD4. And as a lone voice, rather than as part of a club of twenty-eight, the UK would have less influence on shaping those international standards in the first place. On the other hand, a non-EU UK would have more latitude to pick and choose the bits it likes and the bits it wants to hang fire on – much as Guernsey, Jersey and the Isle of Man are doing now.
One thing that will change immediately is the UK’s equivalent status. As a member of the EU, it is granted pretty much automatic equivalent status by all other EU Member States, which allows a few due diligence shortcuts. These will disappear, and indeed, if our former bedfellows cut up snippy about our desertion, the UK might even find itself at the other end of the spectrum, considered a high risk money laundering jurisdiction. Any agreements with other jurisdictions – you scratch our back and we’ll scratch yours – would have to be negotiated one by one. And I’m far from expert on the implications for international exchange of information between FIUs but again, I should imagine that the loss of the EU club short-circuit will necessitate some renegotiation.
So those are my AML Brexit thoughts – how about you lot? What might it mean for the MLRO-about-town?