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INVITATION TO COMMENT ON THE ESTABLISHMENT OF A REGULATORY REGIME FOR MONEY SERVICE BUSINESSES

Click here to view the Consultation document, Regulatory Regime for Bureaux de Change, Money Transmission Agents & Cheque Cashers (Money Service Businesses).

Draft Statutory Instrument for Money Services Businesses

Conclusion 38 of the Cabinet Office Performance and Innovation Unit June 2000 report, “Recovering the Proceeds of Crime” ^[1] , was that a light touch regime for regulating Bureaux de Change, money transmission agents and cheque cashers (Money Services Businesses) should be established.  This regime is now being introduced in the context of the need to reinforce the UK’s ability to combat money laundering and particularly terrorist financing.

A Consultative Document on the proposed regime can be found on this website.  The PIU report can also be found at the Cabinet Office’s website http://www.cabinet-office.gov.uk/innovation .

Law enforcement officials have found widespread evidence that money launderers have identified weaknesses in Money Services Businesses, and that without a positive change in this area, these businesses will increasingly be used by international money launderers.  Bureaux de Change, money transmission agents and cheque cashers are already subject to the Money Laundering Regulations. Unlike most other financial businesses, however, Money Services Businesses are not supervised for compliance purposes by a regulator such as the Financial Services Authority or a professional body. 

This proposal for a regulatory regime is that they should be regulated by HM Customs and Excise.  Businesses would register with Customs and would then be subject to a risk based inspection system, thereby ensuring that they are compliant with their existing obligations. Customs would be granted powers of entry and inspection and would also provide education to business operators on their obligations under the 1993 Regulations.  Such a system would bring the UK into line with practices already in place in other EU member states.  The regulatory regime would deter criminals from using or controlling Money Services Businesses for money laundering and ensure that such businesses have systems in place to detect money launderers who do use them, and that they report their suspicions.  

To assist the Government in considering these proposals, the consultative document is being sent to a wide range of interested organisations. Views relevant to the implementation of the regime are invited. 

We ask that any comments should be received by the Treasury no later than Monday 5 November.  We cannot guarantee to consider any responses received after that date.  Responses should be sent to:

Richard Clarke

Financial Crime Branch

HM Treasury

Allington Towers

19 Allington St

LONDON

SW1E 5EB

or by email to Richard.Clarke@hm-treasury.gov.uk

or by fax to (020) 7270 5430

We look forward to receiving views on these proposals.