Frequently asked questions

The Money Laundering Regulations 2007 require that safe deposit box providers take a number of steps. Businesses must, for example:

• apply "customer due diligence" measures, whereby the identity of the customer is identified and verified, and information is obtained about the nature and intended nature of the business relationship;
• monitor business relationships on an ongoing basis, to identify suspicious activity and ensure that information about the customer is up-to-date;
• apply more stringent measures in situations where there is a higher risk of money laundering;
• report suspicious activity to the authorities;
• maintain appropriate procedures designed to achieve the above, including procedures related to record-keeping and staff training.

For a full understanding of what is required, there is no substitute for consulting the Regulations.

Money Laundering Regulations 2007 [PDF]

The FSA is keen to ensure that businesses have access to clear guidance about steps they can take to meet their obligations. We have been consulting with safe custody providers about this, and several companies are contributing to drafting guidance: we are grateful for their efforts here. Once the guidance is complete, we will publish it on these pages.

In the meantime, you might wish to consult the guidance that has been prepared for the financial services industry. This has been written by an industry body called the Joint Money Laundering Steering Group.

The Money Laundering Regulations 2007 came into effect on 15 December 2007, and introduced a number of new legal requirements on providers of safety deposit boxes. These Regulations act to bring the requirements of the EU's Third Money Laundering Directive into UK law.

The EU's Third Money Laundering Directive requires that all EU countries have taken similar measures to combat money laundering and the finance of terrorism. The Directive acts to bring the European Union in line with international standards. These standards have been introduced by an international body called the Financial Action Task Force: you can find out more here.

Businesses that need to register can do so using the Registration Form. There are also guidance notes that will help you to complete the form.

Businesses that need to register should complete the form and post it to:

Permissions Department
The Financial Services Authority
25 The North Colonnade
London
E14 5HS

The deadline for registration is 15 June 2008.

Failure to register is an offence that potentially carries either a civil or criminal sanction.

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There is a registration fee of £100. Please include a cheque for this amount made payable to the "Financial Services Authority" with your application. If you do not include the cheque, your registration will not be complete.

Registered businesses will also need to pay an ongoing annual fee. We estimate that this will be between £200 and £400 every year. Businesses will receive their first invoice in 2009.

For more information about fees, see section 4 of our approach document [PDF]

You have until 15 June 2008 to register with the FSA. If you began trading after 15 June 2008, you will need to have registered with the FSA before you commenced business.

There are both civil and criminal penalties for failing to comply with the requirements of the regulations.

The systems and controls that safe custody services are required to put in place have the ultimate purpose of enabling them to report knowledge or suspicions about money laundering or terrorism to the authorities.

Suspicious transaction reports should be filed with the Serious Organised Crime Agency (SOCA). You are encouraged to make SARs (suspicious activity reports) online.

For advice on completing SARs, please refer to the list of frequently asked questions on the SOCA website.

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The Money Laundering Regulations 2007 uses the term "safe custody services" to describe an activity that will be supervised by the FSA. We regard this term to have the following meaning:

"A safe custody service offers safety deposit boxes or other secure storage suitable for high-value physical items like jewellery or documents of title."

For the sake of clarity, a business solely offering the following services would not be considered by the FSA to be a safe custody service:

• The storage of goods such as luggage, household items or motor vehicles;
• The storage of non-physical property like computer data;
• The secure transportation of high value items;
• Offering safe custody on an occasional or very limited basis, such as hotels providing a safe for use by guests. (See following question).
  

A businesses that offers safe custody services on a limited or occasional basis is excluded from the requirements of the Regulations. (This is in Regulation 4(2)).

To be excluded, your business must meet all of the criteria below (which appear in Paragraph 1 of Schedule 2 to the Regulations):

1. your business' total annual turnover in respect of the financial activity does not exceed £64,000;
2. the financial activity is limited in relation to any customer to no more than one transaction exceeding €1,000, whether the transaction is carried out in a single operation, or a series of operations which appear to be linked;
3. the financial activity does not exceed 5% of your business' total annual turnover;
4. the financial activity is ancillary and directly related to your business' main activity;
5. the financial activity is not the transmission or remittance of money (or any representation of monetary value) by any means;
6. your business' main activity is not that of a person falling within regulation 3(1)(a) to (f) or (h); and
7. the financial activity is provided only to customers of your business' main activity and is not offered to the public.

If your business satisfies all of the above criteria you do not need to register with us and you are not subject to the requirements of the Regulations.

The Money Laundering Regulations 2007 [PDF]

No: firms that are authorised by the FSA do not need to register.

We seek to adopt a ‘risk-based’ approach to supervision. This means that we aim to concentrate our supervisory resources where the risk is greatest: as such, we will seek to identify which registered businesses are most likely to be used as a means of laundering the proceeds of criminal activity.

There are a number of 'tools' we may use when supervising businesses. We may ask businesses to complete questionnaires or other information requests that will allow us to understand their approach to complying with their obligations. We may also visit businesses and speak to their senior management. We will either approach businesses individually, or as part of 'thematic' work to discuss one particular aspect of compliance with a range of providers. Other tools may include 'mystery shopping', where we commission researchers to pose as prospective customers of a safe custody provider, in order to observe compliance with the Regulations. We will also maintain a helpline that will be able to answer businesses' queries about the Regulations.

It should be noted that, while we will seek to maintain a cooperative and open dialogue with registered businesses, the Money Laundering Regulations give us legal powers to, for example, require relevant people to provide information, or compel individuals to attend an interview.

The consolidated list of financial sanctions targets maintained by the Asset Freezing Unit of HM Treasury contains details of known terrorists and other persons who have had their funds frozen after sanctions have been applied by the UN, EU or UK government. It is an offence for anyone to make funds available to a person or entity that is the target of sanctions. As such, safe custody services would be well advised to have procedures in place to check whether new and existing customers are subject to sanctions.

No, the Regulations affect a wide range of businesses, from casinos to estate agents, many of which will be supervised for the first time. The FSA is just one of over twenty "competent authorities" with supervisory responsibilities. Other bodies include the Office of Fair Trading, HM Revenue and Customs, the Gambling Commission, the Law Society and the Institute of Chartered Accountants in England and Wales. For a full discussion, please see the Regulations, or consult our Approach Document.

We have described our approach to regulating and supervising registered businesses in "The FSA’s new role under the Money Laundering Regulations 2007: Our Approach". This was published in September 2007.