Britain Issues New AML Law for Overseas Territories

In an attempt to protect Britain’s overseas territories from money laundering, the UK has introduced the Sanctions and Anti-Money Laundering Act (SAMLA) which requires the territories to establish public registries of beneficial corporate ownership by December 31, 2020.

SAMLA was granted Royal Assent on May 23, 2018, and is crucial to UK’s exit from the European Union, also known as Brexit.  Previously, the UK government relied on the European Communities Act of 1972 for the power to ensure that proper AML and counter-terrorist finance (CFT) regulations were put in place.  However, with the UK’s exit from the EU, this law would be repealed.  SAMLA specifically gives the Secretary of State or Treasury the power to enact sanction regulations, such as visa bans, following international UN obligations and foreign policies of the UK and protecting civilians in conflict areas.  Boris Johnson, Foreign Secretary at the time stated, “Thanks to this new law, once we have left the EU, we will have full control of our own sanctions policy again.  That will give us the power to impose sanctions, including for human rights abuses.  Sanctions are a key foreign policy and national security tool for the UK, and the new legislation will allow the UK to act in line with our own priorities, as well as with our international partners.”

Members of Parliament (MPs), Conservative Andrew Mitchell and Labour MP, Margaret Hodge, called for greater transparency on overseas territories via the establishment of public registries, which all 14 territories did not currently have.  Without the registries to keep a record of the beneficial owners, critics alleged that crimes such as tax evasion, corruption and fraud would be easier to commit, with the Panama and Paradise Papers being a perfect example.  The leaked papers revealed that over half of the companies exposed were registered in the British Islands.  Moreover, with tax havens costing developing countries $170 billion in revenue every year and the poisoning of a former Russian double spy, which forced the UK’s attention onto offshore companies being used by Russians to invest in Britain, more people are pushing for greater transparency in Britain’s overseas territories.on

The Magnitsky Amendment, which is based on the US law similarly named, is also a part of SAMLA and enables sanctions against foreign government officials who have been connected to human rights abuses anywhere in the world.  In addition, it also gives the National Crime Agency (NCA) the power to seize property that was obtained through human rights abuses.  SAMLA is crucial to the fight against bank secrecy because it makes it more difficult for criminals to hide funds from illicit crimes and activities and increases sanctioning on individuals, entities and industries.  However, SAMLA will not apply to the Isle of Man and Channel Islands due to Parliament not being able to impose its laws onto the self-government crown dependencies.


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