Home Office & HMRC publish National Risk Assessment including MSBs


The government has launched its latest NRA

Updating 2015 information. It states that;

-Over 650 bank accounts have been closed since 2015

-More than 2,100 new bank-led investigations of suspected money laundering activity were initiated.

In relation to Money Service Businesses(MSBs) they recognised that MSBs play an important function especially for those without access to banking services. Cross-border remittances facilitated by MSBs have also been shown to play a key role in supporting economic development within developing countries. World Bank data suggests that remittances outflows from the UK were approximately $11.5 billion in 2014, with Nigeria ($3.8 billion) and India ($3.7 billion) the largest beneficiaries.

The 2015 NRA noted that around 3,000 principal MSBs were registered with HMRC. This number is now just over 2,000, including over 1,300 firms providing currency exchange, over 1,000 firms providing money transmission, and over 500 firms providing cheque cashing services. The structure of the sector is such that while only around 2,000 principals are registered, there are over 45,000 premises on which these services are conducted through both principals and their agents.

The 2015 NRA judged the risk of MSBs being abused for money laundering to be medium. They found however, that MSBs were being used for money laundering on a significant scale to place large sums of criminal cash overseas; and that MSBs had low levels of compliance with the MLRs. Due to the persistence of the risks identified in 2015, and  firms increasingly looking to operate outside of contact with the regulatory regime, there is now assessed to be high money laundering risks associated with the MSB sector. However, there remain certain services offered by the sector (such as cheque cashing) with little or no risks identified.

The 2015 NRA assessed MSBs as high risk for terrorist financing and this hasn’t changed. However, they state that high risks associated with the MSB sector should be managed on a case-by case basis.

The government is concerned about the trend of de-risking, and has been at the forefront of international efforts to raise the profile of the issue. The UK is leading the global agenda on improving remittance providers’ access to banking services, chairing a working group of the Financial Stability Board which will report to the G20 Finance Ministers in March 2018. Closer to home, the government has been working with affected sectors in the UK to better understand their experiences and encourage dialogue with the banking sector. This includes working with the banking sector to produce new guidance to help businesses in affected sectors to open a UK bank account, by setting out what information banks will require to comply with relevant regulations.

Money transmission has declined by 21% decline in the number of registered principals between 2014 and 2016. It is thought that these changes have been driven largely by banks withdrawing services from MSBs by de-risking.