FCA Financial Crime team are currently contacting a sample of pawnbrokers asking 8 general questions about AML as part of their own due diligence in regard to the 4th Money Laundering Directive with the Money Laundering Regulations MLR 2017 (SI 2017/692) which came into effect on 26th June. This is informative them rather than being an audit or thematic review of AML in pawnbroking. The 4th directive requires the firm to have a focus on understanding the risks of money laundering and/or terrorist funding that could affect your business. The other main change is that UK Politically Exposed Persons and their families (such as politicians down to council level, and senior civil servants) would now trigger enhanced due diligence. Unfortunately at present the government has not provided an accessible list of these people so one would have to rely on asking the customer. FCA already require the Money Laundering Reporting Officer (MLRO) to report to a board director or senior manager. For Money Service Businesses there will be a requirement to register the director responsible, but HMRC have not yet advised how this will done. There is more detail in the Summer edition of The Pawnbroker hitting members doorsteps in the next few days.
HMRC say that serious and organised crime costs Britain at least £24 billion every year, and recent attacks demonstrate the importance of a strong toolkit to prevent terrorist atrocities. Although the vast majority of businesses are vigilant, these new rules will ensure that they are not abused by criminals or terrorists looking to move funds or obscure assets. The new rules will improve the quality of the checks. They ensure that businesses can spot suspicious activity and report it, enabling the police to act swiftly and decisively to prevent corruption or terrorist attacks.
The Economic Secretary to the Treasury, Stephen Barclay, said:
“We are cracking down on terrorists and criminals funneling money through our financial system. Terrorist financing and money laundering are significant threat to our national security, and we are determined to make the UK a hostile environment for illicit finance. These new rules will tighten our defences, protect the integrity of our financial system and help protect the British public from terror attacks and criminal activities. The partnership between the banking sector and law enforcement is vital in limiting abuse of the financial system by terrorists and criminals. In the recent terrorist attacks in the UK, major UK banks provided 24 hour support for an extended period to provide critical financial intelligence to support law enforcement partners.
The FCA have announced a forthcoming pawnbroking review and are consulting with NPA aimed at a better understanding of our market. The questionnaire is being finalised and pawnbrokers will be mailed or e mailed in the coming weeks. One outcome should hopefully be an improvement in the requirements for GABRIEL reporting- which some members have found impractical for pawnbroking.
Preparations are underway for the General Data Protection Regulation (May 2018) and our magazine will give guidance on making sure your current DP policy is in a ‘good place’.
NPA have created a Compliance checklist for members, which is available on the members area of the website.
Following last years heavy critism of debt management firms by the FCA, you may have notieced that the Queen’s Speech included the Financial Guidance & Claims Bill which will create one single Financial Guidance Body to coordinating the provision of debt advice, pension and money guidance funded in part by the financial services industry.
Sale and Buy Backs
The Bills of Sale Act which is way out of date will be repealed and replaced with a Goods Mortgage Act which will clarify regulation around for example logbook loans and buy backs. No further detail is known at this stage.
General Data Protection Regulation
The GDPR comes into effect in May 2018 and will clarify information that should be kept and the customers’ rights to access and/or have information destroyed. This is a topic in the Summer Pawnbrokers magazine for members. The ICO (information commissioners office) have produed a 10 step guide to what you should be doing now to make sure you are ready for next year. This is available on our members website.