Fifth Money Laundering Directive—what’s changed—law firms [Archived]

The following Practice Compliance practice note provides comprehensive and up to date legal information covering:

  • Fifth Money Laundering Directive—what’s changed—law firms [Archived]
  • Background
  • Key changes
  • High-risk third countries and super-enhanced CDD
  • EDD for high-risk third countries
  • Super-EDD for high-risk third countries
  • CDD
  • CDD on existing clients
  • CDD on companies and trusts
  • Electronic verification
  • More...

Fifth Money Laundering Directive—what’s changed—law firms [Archived]

STOP PRESS: Draft Legal Sector Affinity Group (LSAG) AML guidance was published on 20 January 2021. It awaits approval by HM Treasury and any content may be amended before the final version is published with the Treasury's approval. This document reflects HM Treasury approved LSAG AML guidance published in 2018 and will be updated in due course.

ARCHIVED: This Practice Note has been archived and is no longer maintained.

The Fourth Money Laundering Directive (4MLD), replacing the Third Directive which had been in force since 2005, was transposed across Europe in June 2017. A mere 13 months later, in July 2018, the Fifth Money Laundering Directive (5MLD) came into force.

It is an ‘Amending Directive’ because it amends 4MLD. Implementing the requirements of 5MLD involved the UK government making changes to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692 through the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511 in force from 10 January 2020. See below: Timeline.

This Practice Note sets out the background to 5MLD and the key changes it introduces. It summarises the key changes brought about by the MLR (Amendment) Regulations 2019 and discusses future developments. It is intended for use by law firms.

Background

Money laundering and terrorist financing present fast-moving, ever-evolving and unpredictable risks. The nature

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