Feedback Paper on Consultation Paper No.12 2022 – Further enhancements to the AML/CFT Handbook

Summary

This is a JFSC feedback paper summarising industry responses to Consultation Paper No.12 2022, which proposed further amendments and new guidance across multiple sections of the AML/CFT Handbook (now the AML/CFT/CPF Handbook). It sets out the comments received on each proposed Section, the JFSC's response to each, and confirms which amendments will be carried into the revised Handbook.

• Corporate governance (Section 2): Retains the Code of Practice on Supervisory Risk Data Questionnaires and business risk assessment guidance, with added factors on sensitive activities and reference to the Sound Business Practice Policy; percentages for risk appetite remain guidance only, not a requirement.
• Identification measures (Sections 3 and 4): Clarifies the level of detail expected when reviewing a customer's wider business activities, adds FATF terminology for black/grey lists, expands guidance on screening underlying entities, and defers new guidance on 'challenges to identification' to further guidance expected in Q2 2023.
• Ongoing monitoring and sanctions (Section 6): Confirms the obligation to screen all business relationships and one-off transactions for sanctions irrespective of customer risk profile, and retains expectations around acting on sanctions notices within 24 hours, with further clarification to follow.
• Reporting, training and record keeping (Sections 8, 9, 10): Retains guidance permitting non-use of smart phones in certain identification scenarios (moved to Section 4.3.2 in the revised Handbook) and clarifies the distinction between accounts files and business correspondence records.
• Lawyers and accountants (Sections 15 and 16): Retains the existing 'wholly financed' terminology for property transaction guidance and adopts the proposed sector examples for higher ML/TF risk in the accountants' guidance without amendment.

The JFSC confirms it will publish the revised Handbook in the week commencing 27 March 2023, incorporating both these amendments and previously flagged AML/CFT scope exemption changes. A transition period to 30 June 2023 is provided to allow supervised persons to embed the changes, with the revised Handbook becoming effective on 1 July 2023, aligned with the amended AML/CFT scope exemptions.

Key obligations

• Supervised persons must embed the changes in the revised AML/CFT/CPF Handbook during the transition period running to 30 June 2023, ahead of the Handbook becoming effective on 1 July 2023
• Supervised persons must undertake sanctions screening for all business relationships and one-off transactions irrespective of customer risk profile
• Supervised persons must be able to review and act upon sanctions notices within 24 hours
• Supervised persons must consider their risk appetite on an ongoing basis as required by the Code of Practice (paragraph 12)
• Where a supervised person cannot meet a Supervisory Risk Data Questionnaire deadline, it must contact its supervisor to request an extension

Applies to

supervised persons, Trust and Company Service Providers (TCSPs), lawyers, accountants, DNFBPs, Financial Services Business (FSB) licence holders, Trust Company Business (TCB) licence holders, Investment Business (IB) licence holders, Money Service Business (MSB) licence holders, Deposit-taking/Company (DC) licence holders, General Insurance Mediation Business (GIMB) licence holders

Deadlines

• week commencing 27 March 2023: JFSC aims to publish the revised AML/CFT/CPF Handbook
• 30 June 2023: End of transition period allowing Industry time to embed changes set out in the revised Handbook
• 1 July 2023: Revised Handbook becomes effective, aligned with the amended AML/CFT scope exemptions coming into force