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Sanctions and Anti-Money Laundering Act 2018
Overview
The Sanctions and Anti-Money Laundering Act 2018 (SAMLA) is a significant legislative framework aimed at combatting money laundering, terrorist financing, and other financial crimes. Enacted in the United Kingdom, SAMLA strengthens existing sanctions regimes and enhances measures to detect and prevent money laundering activities.
The Sanctions and Anti-Money Laundering Act 2018 was introduced to ensure the UK’s ability to implement and enforce its own sanctions regimes independently, following its exit from the European Union. SAMLA provides the legal basis for imposing and enforcing sanctions, as well as implementing international obligations related to anti-money laundering measures.
Key Requirements under SAMLA:
- Sanctions Regimes: SAMLA empowers the UK government to impose and enforce various types of sanctions, including asset freezes, travel bans, and trade restrictions. These sanctions can be applied to individuals, entities, or countries involved in activities such as terrorism, human rights abuses, or proliferation of weapons of mass destruction.
- Anti-Money Laundering (AML): SAMLA strengthens AML measures by enhancing customer due diligence (CDD) requirements, expanding the definition of politically exposed persons (PEPs), and imposing more rigorous reporting obligations on businesses. This includes mandatory reporting of suspicious activities and establishing internal systems to prevent money laundering and terrorist financing.
- Information Sharing and Cooperation: SAMLA encourages international cooperation by enabling the UK government to share information and collaborate with other jurisdictions to combat money laundering, terrorist financing, and other financial crimes effectively.
The Sanctions and Anti-Money Laundering Act 2018 was passed on the 23rd of May 2018.
The Sanctions and Anti-Money Laundering Act 2018 applies to the following countries:
- United Kingdom;
- England;
- Scotland;
- Wales; and
- Northern Ireland.
Does the Sanctions and Anti-Money Laundering Act 2018 affect my business?
The Sanctions and Anti-Money Laundering Act 2018 has a significant impact on businesses, both within the UK and those operating internationally. Here are some key ways in which businesses are affected:
- Compliance Obligations: Businesses are required to implement robust compliance programs to meet the enhanced AML requirements. This includes conducting thorough risk assessments, establishing adequate internal controls, training employees on AML practices, and regularly monitoring and reporting suspicious transactions.
- Due Diligence and Enhanced Know Your Customer (KYC): SAMLA necessitates businesses to strengthen their due diligence processes and conduct more thorough KYC checks on customers and business partners. This ensures the identification and verification of individuals and entities to prevent illicit activities.
- Reporting Obligations: Businesses must maintain comprehensive records of transactions and report any suspicious activities promptly to the relevant authorities. Failure to comply with reporting obligations can result in severe penalties and reputational damage.
- International Operations: Businesses operating internationally must navigate and comply with the sanctions regimes imposed by the UK government and other jurisdictions. This requires ongoing monitoring of changes in sanctions lists and implementing necessary controls to ensure compliance.
Do I need the Sanctions and Anti-Money Laundering Act 2018 in my ISO Compliance Register?
You will need the Sanctions and Anti-Money Laundering Act 2018 in your ISO Compliance Register, as well as have certain requirements under the Act such as those mentioned above, if your business falls under the following categories:
- Financial Institutions: Banks, credit unions, insurance companies, and other financial institutions are directly affected by SAMLA. They must comply with stringent AML regulations and conduct due diligence to prevent money laundering and terrorist financing.
- Professional Service Providers: Lawyers, accountants, tax advisors, trust and company service providers, and other professionals are obligated to comply with SAMLA’s AML provisions, as they often play a crucial role in facilitating financial transactions.
- Cryptocurrency Exchanges: SAMLA extends its reach to cryptocurrency exchanges and platforms dealing with virtual assets. These entities must implement effective AML controls to prevent the misuse of digital currencies for illicit purposes.
- Exporters and Importers: Businesses involved in international trade, including exporters and importers, are affected by SAMLA. They need to ensure compliance with trade restrictions and sanctions imposed by the UK government and other relevant jurisdictions.
- Real Estate and Property Sector: SAMLA has implications for the real estate and property sector. Businesses engaged in property transactions, such as estate agents, developers, and property management companies, must adhere to AML obligations to prevent money laundering through real estate investments.
- Charities and Nonprofit Organizations: Charitable organisations and nonprofits are subject to SAMLA’s requirements to prevent the misuse of funds for illicit purposes. They must implement robust internal controls and reporting mechanisms to ensure transparency and accountability.
- High-Risk Industries: Certain industries, such as gambling, precious metals and stones, art dealers, and high-value goods traders, are considered high risk for money laundering activities. These businesses face enhanced scrutiny and must implement stronger AML measures to mitigate the associated risks.
By imposing and enforcing sanctions, enhancing AML measures, and promoting international cooperation, SAMLA places significant obligations on businesses across various sectors. Compliance with SAMLA’s requirements, including robust AML controls, thorough due diligence, and timely reporting, is essential to ensure legal and ethical business practices, protect against financial risks, and maintain the integrity of the financial system.
Legislation related to the Sanctions and Anti-Money Laundering Act 2018
Legislation related to the Sanctions and Anti-Money Laundering Act 2018 include:
- The Cyber (Sanctions) (Overseas Territories) Order 2020
- The Global Anti-Corruption Sanctions Regulations 2021
- The Money-Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
- Export Control Order 2008
More information
Visit the Sanctions and Anti-Money Laundering Act 2018 on the legislation.gov.uk website.
Create an account in the ISO Compliance Register App and add this article to your Register.