Friday, October 30, 2020

UK: Treasury consults on extension of Money Laundering Directive to tax advice

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The Directive makes amendments to the Fourth Money Laundering Directive on the prevention of the use of the financial system for the purposes of money laundering and terrorist financing. The government intends that the new provisions will come into force by 10 January 2020, in line with Article 4 of 5MLD.

These amendments and new provisions will further strengthen transparency and the existing preventative framework, while ensuring the UK adheres to international standards set by the Financial Action Task Force.

It also brings tax advice into the framework for the first time. The revised directive expands the scope of the current rules, bringing tax matters into the remit for the first time for accountants, tax advisers and auditors, who are already required to comply with version 4 of the directive.

Article 2 of the existing Directive will be amended to expand the scope of obliged entities to include any other person that undertakes to provide, directly or by means of other persons to which that other person is related, material aid, assistance or advice on tax matters as principal business or professional activity.

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As part of this change, the government will expand the definition of ‘tax adviser’ in the money laundering regulations to include firms and sole practitioners who provide, directly or by way of arrangement with other persons, material aid, assistance or advice about the tax affairs of other persons.

The Treasury wants to gauge views on what additional activities should be covered by the expanded definition of tax adviser, and the impact of such changes.

There are also a number of changes to the anti-money laundering responsibilities of letting agents, with the government set to expand the requirement for customer due diligence (CCD). It is particularly focusing on the impact for letting agents of carrying out CDD measures on both parties to the rental agreement (ie, on landlords and tenants) in a transaction where the agents act as intermediaries.

The amended Article 2 also states that ‘estate agents, including when acting as intermediaries in the letting of immovable property, but only in relation to transactions for which the monthly rent amounts to €10 000 (£8,600) or more’, will be brought into the regulations as ‘obliged entities’ [regulated businesses] going forward.

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