techUK responds to the Government consultation on improving money laundering regulations
On 11 March 2024 HM Treasury (HMT) published a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’), which place requirements onto a range of businesses to identify and prevent money laundering and terrorist financing.
With new technologies being developed and continuing global threat from economic crime and illicit finance, it is more important than ever that businesses have access to the right tools to identify and prevent money laundering and terrorist financing.
The UK’s Money Laundering Regulations (MLRs) form a vital bulwark against the proceeds of crime entering the UK financial system. With new technologies being developed and continuing global threat from economic crime and illicit finance, it is more important than ever that we give businesses the right tools to identify and prevent money laundering and terrorist financing. A balanced and effective AML/CTF (anti-money laundering and counter-terrorist financing) regime protects the UK’s reputation as a modern, safe place to do business, and protects the integrity of the financial system. As a global issue, it is crucial that the UK continues to show leadership on economic crime, driving up standards worldwide and involving the private sector as an active partner.
Digital Identity
Digital ID technology is emerging as a powerful tool in the fight against money laundering in the UK. By providing secure, efficient, and cost-effective means of identifying individuals, it can significantly enhance the effectiveness of AML measures. Digital ID technology offers a more robust solution by enabling financial institutions to carry out customer due diligence (CDD) and Know Your Customer (KYC) checks more accurately and efficiently. This can help to identify suspicious activities more quickly, reducing the risk of money laundering.
The potential benefits of digital ID technology in combating money laundering are clear. With the aid of digital ID technology, the processing of such reports could become more efficient and accurate. The Department for Science, Innovation and Technology (DSIT) has created a “digital identity and attributes governance framework” (also known as the “Trust Framework”) which governs private sector suppliers of digital verification services. This framework sets out the rules for the future use of digital identities.
The Department for Science, Innovation and Technology (DSIT) has created a “digital identity and attributes governance framework” (also known as the “Trust Framework”) which governs private sector suppliers of digital verification services. This framework sets out the rules for the future use of digital identities. techUK are pleased that this consultation has a section dedicated to enhancing the role Digital Identity can play to assist government, regulators and law enforcement in combating money laundering.
Key recommendations from techUK
- Strengthening understanding of Digital ID: HMT should work with techUK to help build awareness and confidence in utilising Digital ID to help in efforts against money laundering.
- Implementation of the Trust Framework could significantly aid for anti-money laundering efforts: HMT should make reference in its MLRs to the DSIT Trust Framework for Digital ID.
- Digital ID and robustness of the Trust Framework: HMT should work with DSIT to ensure that the Trust Framework is enshrined in law urgently.
- Digital ID and effectiveness of the Trust Framework: HMT should work with DSIT to ensure that the Trust Framework governs the public sector as well as industry, for robust, effective and frictionless AML activities.
Digital Assets
Digital assets aim to provide disruption to traditional models in finance and payments, driving changes in the broader financial ecosystem. Examples of digital assets include cryptocurrencies and tokenisation.
Digital assets have experienced rapid growth, with 516m cryptocurrency users worldwide and a daily trading volume of $116.61bn per 24 hours. The global market capitalisation of cryptocurrencies was approximately $2.37tn on 31 May 2024.
However, many of the benefits of cryptocurrencies pose issues to governments, regulators, and financial institutions due to their anonymity and ease of use in creating a wallet. The United Kingdom has taken a proactive approach to addressing the difficulties posed by digital assets such as cryptocurrencies, particularly those related to money laundering. The Financial Conduct Authority (FCA), the country's financial regulator, has led these initiatives.
Key recommendations from techUK
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techUK members have expressed a desire that the MLRs are implemented proportionately: HMT should deliver a proportionate approach to the revision of MLRs, introducing new requirements only where they will add value and deliver against the desired outcomes.
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Information sharing: HMT should consider how MLRs can help to facilitate greater sharing of information from all sectors where digital assets can be leveraged, to provide a much fuller picture of trends and intelligence.
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National Risk Assessments: HMT and regulators should work with industry to better understand solutions that can help deliver real-time analysis of risk beyond National Risk Assessments.
Click here to download techUK’s full response.
To find out more about our Digital Identity programme, please click here or contact [email protected]
If you want to get more involved with techUK's work focused on Digital Identity, you can join the Digital Identity working group. By signing up you will receive regular updates about upcoming events, opportunities and calls-to-action to get involved with the group outputs.
Alternatively, if you would like more information on our Financial Services programme or National Security programme, please contact [email protected] and [email protected]
Andy Thornley
Andy Thornley
Andy joined techUK in August 2022 as Head of Programme – Financial Services. His role includes leading techUK’s work in building a greater understanding of the 'technological art of the possible' in order to apply it to the reform and evolution of financial systems.
Before joining techUK, Andy worked for a number of other bodies in the financial services sector, including the British Insurance Brokers’ Association, where in addition to owning policy and public affairs, he was also responsible for fostering InsurTech in the sector.
Andy has a degree in Human Biology and holds a Certificate in Insurance (Cert CII) qualification from the Chartered Insurance Institute. Outside of work, Andy is an avid cyclist and races competitively both on the road as well as the velodrome.- Email:
- [email protected]
- Twitter:
- @AndrewThornley
- LinkedIn:
- https://www.linkedin.com/in/mr-andy-thornley/
Dr Mahlet (Milly) Zimeta
Dr Mahlet (Milly) Zimeta
Dr Mahlet (Milly) Zimeta was Head of Public Policy at the Open Data Institute until November 2022, where she led the ODI’s engagement with the UK National Data Strategy, the UK’s G7 Presidency, and UK data protection reform; and led the ODI’s work on inclusive data, on secondary use of health data in Europe, and on Experimentalism and the Fourth Industrial Revolution.
Prior to joining the ODI in September 2020, Milly was Senior Policy Adviser at the Royal Society, the independent scientific academy of the UK, where she led the Society’s policy programme on Data and Digital Disruption including projects on data governance, data science skills, and privacy enhancing technologies.
Milly was previously Programme Manager at the Alan Turing Institute, Britain’s national institute for data science and AI, where she managed the Turing’s research partnership programmes in Health and in Finance/Economic Data Science. She has also worked at the Medical Research Council, and served on an Advisory Group at Chatham House. She holds degrees in philosophy from Oxford, Cambridge and York (UK).
Elis Thomas
Elis Thomas
Elis joined techUK in December 2023 as a Programme Manager for Tech and Innovation, focusing on AI, Semiconductors and Digital ID.
He previously worked at an advocacy group for tech startups, with a regional focus on Wales. This involved policy research on innovation, skills and access to finance.
Elis has a Degree in History, and a Masters in Politics and International Relations from the University of Winchester, with a focus on the digitalisation and gamification of armed conflicts.
- Email:
- [email protected]
- Website:
- www.techuk.org/
- LinkedIn:
- https://www.linkedin.com/in/elis-thomas-49a1aa1a1/