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UK Government explores AML reform for Open Banking payment service providers

27/07/2021

On 22 July 2021, HM Treasury published a consultation paper covering various proposed amendments to the UK’s anti-money laundering (AML) framework, including the potential removal of account information services (AIS) from the scope of the Money Laundering Regulations (MLRs). HM Treasury is also inviting feedback on the potential money laundering and terrorist financing (ML/TF) risks presented by payment initiation services (PIS), noting that the potential higher relative risk to AIS may suggest maintaining payment initiative service providers (PISPs) within the scope of the MLRs. PISPs in particular may want to take this opportunity to engage with the consultation process, which will remain open until 14 October 2021, ahead of the proposed introduction of final legislation in Spring 2022. The perceived disconnect between the compliance burden on account information service providers (AISPs), who provide “information only” services to customers to enable them to view consolidated financial information about multiple accounts, and the actual ML/TF risks their services are exposed to has been observed by market participants for some time. This had led to different approaches in practice as to the level of customer due diligence that AISPs carry out. The European Banking Authority (EBA) has also recently consulted on and issued updates to its Guidelines on ML/TF risk factors (link), explaining that it had received the largest number of responses in relation to the risks posed by AISPs and PISPs, acknowledging that “the inherent ML/TF risk associated with them is limited”. PISPs are involved in the payment chain but do not execute payment transactions themselves and do ...

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