On the 31st December 2020, the UK will complete its transition period to leave the European Union (EU), with or without a trade deal agreement in place. Whilst we anticipate that Brexit will affect regulatory compliance for many sectors, the full extent of the impact is somewhat unclear until negotiations have been finalised.
Following Brexit however, the 5MLD will change slightly as the EU member states will have to treat the UK as a ‘third country’. Currently, EU regulation requires UK financial providers to supply specific documentation from official sources such as Government and public registers in connection with transfers of funds between the UK and EU. However, treating the UK as a ‘third country’ will require moving from a simplified way of verification to enhanced due diligence checks, which could slow processes down and have a negative impact on trade.
Some observers believe that the UK could use the opportunity to significantly reduce financial regulations to gain a competitive advantage over the EU when attracting big business. However, although relaxing regulation could make the UK more attractive for global business, it would also likely increase exposure to money laundering activities, as opportunist criminals searching for methods to move illicit funds will naturally gravitate towards any structural weaknesses
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