MUTUAL EVALUATION OF THE UNITED KINGDOM

1 December 2018 Anti-money laundering and counter-terrorist financing measuresUnited KingdomAnti-money laundering and counter-terrorist financing measuresUnited KINGDOM MUTUAL EVALUATION Report The Financial Action Task Force (F ATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The FATF Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CTF) standard. For more information about the FATF, please visit the website: This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

2 This assessment was adopted by the FATF at its October 2018 Plenary meeting. Citing reference: 2018 FATF-. All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the FATF Secretariat, 2 rue Andr Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: Photo Credit - Cover: 2018 Getty Images FATF (2018), Anti-money laundering and counter-terrorist financing measures UNITED KINGDOM , Fourth Round MUTUAL EVALUATION Report, FATF, Paris Table of contents Executive Summary.)

3 3 Key Findings .. 3 Risks and General Situation .. 5 Overall Level of Compliance and Effectiveness .. 5 Priority Actions .. 12 Effectiveness & Technical Compliance Ratings .. 14 MUTUAL EVALUATION REPORT .. 15 Preface .. 15 CHAPTER 1. ML/TF RISKS AND CONTEXT .. 17 ML/TF Risks and Scoping of Higher Risk 18 Materiality .. 21 Structural Elements .. 21 Background and Other Contextual Factors .. 21 CHAPTER 2. NATIONAL AML/CFT POLICIES AND CO-ORDINATION .. 33 Key Findings and Recommended Actions .. 33 Immediate Outcome 1 (Risk, Policy and Co-ordination) .. 34 CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES .. 39 Key Findings and Recommended Actions .. 39 Immediate Outcome 6 (Financial Intelligence ML/TF).

4 42 Immediate Outcome 7 (ML investigation and prosecution) .. 58 Immediate Outcome 8 (Confiscation) .. 72 CHAPTER 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION .. 85 Key Findings and Recommended Actions .. 85 Immediate Outcome 9 (TF investigation and prosecution) .. 87 Immediate Outcome 10 (TF preventive measures and financial sanctions) .. 96 Immediate Outcome 11 (PF financial sanctions) .. 104 CHAPTER 5. PREVENTIVE MEASURES .. 109 Key Findings and Recommended Actions .. 109 Immediate Outcome 4 (Preventive Measures) .. 110 CHAPTER 6. SUPERVISION .. 123 Key Findings and Recommended Actions .. 123 Immediate Outcome 3 (Supervision) .. 124 CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS.

5 145 Key Findings and Recommended Actions .. 145 Immediate Outcome 5 (Legal Persons and Arrangements) .. 147 CHAPTER 8. INTERNATIONAL CO-OPERATION .. 159 2 Anti-money laundering and counter-terrorist financing measures in the UNITED KINGDOM FATF | 2018 Key Findings and Recommended Actions .. 159 Immediate Outcome 2 (International Co-operation) .. 160 TECHNICAL COMPLIANCE ANNEX .. 173 Recommendation 1 Assessing risks and applying a risk-based approach .. 173 Recommendation 2 - National Cooperation and Coordination .. 175 Recommendation 3 - Money laundering offence .. 176 Recommendation 4 - Confiscation and provisional measures .. 178 Recommendation 5 - Terrorist financing offence.

6 179 Recommendation 6 - Targeted financial sanctions related to terrorism and terrorist financing .. 181 Recommendation 7 Targeted financial sanctions related to proliferation .. 186 Recommendation 8 Non-profit organisations .. 189 Recommendation 9 Financial institution secrecy laws .. 192 Recommendation 10 Customer due diligence .. 193 Recommendation 11 Record-keeping .. 197 Recommendation 12 Politically exposed persons .. 198 Recommendation 13 Correspondent banking .. 199 Recommendation 14 Money or value transfer services .. 199 Recommendation 15 New technologies .. 200 Recommendation 16 Wire transfers .. 201 Recommendation 17 Reliance on third parties.

7 203 Recommendation 18 Internal controls and foreign branches and subsidiaries .. 204 Recommendation 19 Higher-risk countries .. 206 Recommendation 20 Reporting of suspicious transaction .. 207 Recommendation 21 Tipping-off and confidentiality .. 207 Recommendation 22 DNFBPs: Customer due diligence .. 208 Recommendation 23 DNFBPs: Other measures .. 209 Recommendation 24 Transparency and beneficial ownership of legal persons .. 210 Recommendation 25 Transparency and beneficial ownership of legal arrangements .. 215 Recommendation 26 Regulation and supervision of financial institutions .. 218 Recommendation 27 Powers of supervisors .. 219 Recommendation 28 Regulation and supervision of DNFBPs.

8 220 Recommendation 29 - Financial intelligence units .. 222 Recommendation 30 Responsibilities of law enforcement and investigative authorities .. 225 Recommendation 31 - Powers of law enforcement and investigative authorities .. 226 Recommendation 32 Cash Couriers .. 227 Recommendation 33 Statistics .. 228 Recommendation 34 Guidance and feedback .. 229 Recommendation 35 Sanctions .. 230 Recommendation 36 International instruments .. 233 Recommendation 37 - MUTUAL legal assistance .. 233 Recommendation 38 MUTUAL legal assistance: freezing and confiscation .. 235 Recommendation 39 Extradition .. 236 Recommendation 40 Other forms of international co-operation.

9 237 Summary of Technical Compliance Key Deficiencies .. 242 Glossary of Acronyms .. 246 Executive Summary Executive Summary Executive Summary 1. This report summarises the anti-money laundering and counter-terrorist financing (AML/CFT) measures in place in the UNITED KINGDOM of Great Britain and Northern Ireland (UK) as at the date of the on-site visit from 5 to 23 March 2018. It analyses the level of compliance with the FATF 40 Recommendations and the level of effectiveness of the UK s AML/CFT system, and provides recommendations on how the system could be strengthened. Key Findings a) The UK has a robust understanding of its ML/TF risks which is reflected in its public national risk assessments (NRAs).

10 National AML/CFT policies, strategies and activities seek to address the risks identified in the NRAs. National co-ordination and co-operation on AML/CFT issues at both the policy and operational levels has improved significantly since the last EVALUATION . b) The UK proactively investigates, prosecutes and convicts a range of TF activity, in line with its identified risks in this area. A particularly positive feature of the system is the strong public/private partnership on TF matters. This is facilitated by the Joint Money Laundering Intelligence Task Force (JMLIT) which facilitates public/private information sharing including on TF and ML investigations.