Money Laundering Regulations 2017—client due diligence—law firms
Money Laundering Regulations 2017—client due diligence—law firms

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

  • Money Laundering Regulations 2017—client due diligence—law firms
  • CDD triggers
  • What is CDD?
  • Identification of client and verification of their identity
  • Purpose and intended nature of the business relationship
  • CDD and existing clients
  • Applying CDD measures
  • Timing of CDD
  • Evidence of identity
  • Source of funds
  • more

Forthcoming changes: The UK has voted to leave the EU and this will take place on exit day as defined in section 20 of the European Union (Withdrawal) Act 2018. This has implications for law firms. This Practice Note is likely to be affected. It will be updated as and when relevant implementing legislation is published. For more on Brexit, see Practice Notes: Brexit—anti-money laundering and counter-terrorist financing—law firms and Preparing for Brexit—key considerations and action planning—law firms.

This Practice Note provides guidance on client due diligence (CDD) which is a central pillar of the anti-money laundering (AML) and counter-terrorist financing (CTF) regime. CDD requirements underpin the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692 which came into force on 26 June 2017.

Where the MLR 2017 apply, conducting CDD is an absolute requirement. It is not in itself subject to the risk-based approach. Certain components of CDD however, allow for flexibility and positively require risk assessment.

CDD triggers

You must apply CDD measures when you:Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, reg 27(1), (2) and (8)

  1. establish a business relationship

  2. carry out an occasional transaction:

    1. that amounts to a transfer of funds within the meaning of Article 3.9 of the funds transfer regulation exceeding €1000, or

    2. that amounts to €15,000 or more, whether executed in a single operation or in several operations which appear to be linked

  3. suspect money laundering or terrorist financing, or

  4. doubt the veracity or adequacy of documents or information previously obtained for the purposes of identification or