The implications of Brexit for UK
anti-money laundering regulations
Will the fourth AML directive be implemented
or be binned?
Department of Research,
Global Action Research and Development Initiative Limited, Barking, UK
Purpose –The purpose of this paper is to explore thelaw relating to European Union (EU) Anti-Money
Laundering (AML) Directivesand the effect of Brexit on money laundering regulation in the UK and the EU.
The ﬁrst part of thepaper involves a review of AML Directives and how they are transposedinto the UK. The
question whether the fourth AML directive or other directives due to become law in the UK will be
implementedor culled will largely depend on the relationshipbetween the UK and the EU going forward. The
UK will have thefull autonomy in terms of making decisions as to whichlaws to implement or which laws to
scrap or to cull, as it sees ﬁt. The UK having relinquishedits membership of the EU notwithstanding could
still be bound by EU anti-money directivesparticularly if it chooses to remain in the EU single market. The
UK could also forge allianceswith EU member states and in which case it will be expected to apply the same
EU market rulesas its other EU counterparts. The fourth AML directivethat was due to become law in all EU
member countriesin June 2017. This directive was introduced to streamlinethe third AML directive (2005/60/
EC) largely with regard to beneﬁcialownership of nominee accounts and politically exposed persons (PEPs).
The paper scoped current EU AML directives, and how they have been used in the ﬁght against money
laundering both in the UK and beyond. Brexit is likely to have far-reachingimplications on many regulatory
areas, including in prevention of money laundering and its predicate offences in the UK and the EU. The
fourth AML directivewas due to become law in the UK on 26 June 2017, andwhether the UK Government will
go ahead and implementit or bin remains to be seen.
Design/methodology/approach –The paper has evaluated the potentialeffect of BREXIT on EU AML
Directives in the UK, drawing examplesin non-EU countries. It articulates the raft of EU AML Directives to
assess whether the fourthAML directive (which was due to become law in June 2017)will become law in the
UK or be culled. It draws on experiencesof non-EU countrieslike Switzerland and Norway, which despite not
being members of the EU, have full access to the EU single market. The ﬁrst part of the paper provides a
review of AML Directives in Europe and how they are internalised into member countries. Data were
evaluated often alluding to existing mechanisms for harnessing EU AML Directives in member countries.
The last part of the paper proposesthe measures that are ought to be done to minimise or forestall the threat
of money launderingand its predicate offences in the post-Brexit regulatory environment.
Findings –The BREXIT has already unravelled marketsboth in the UK and in the EU with far-reaching
implicationson money laundering regulation in multiple ways. The paper has articulatedthe mechanisms for
internalisationof EU AML directives in all Member countries and countriesthat want to exit the EU. It is now
clear that, as the UK voted to relinquish its membership of the EU, it will not be under any obligations to
apply EU AML regimes or any otherEU laws for that matter. The ﬁndings of the paper were not conclusive,
as the UK government has not yet triggered Article50 of Treaty of Lisbon on the functioning of the EU. The
fourth AMLdirective, which was due to become law in the UK on 26June 2016, could still be adopted or culled
depending on the model the UK decides to adopt in its relationshipwith the EU going forward. There is a
possibilityfor the UK to remain a member of the EU single market and to retain some of the regulatoryrules it
has operated in relationto money laundering regulation and its predicateoffences. It could adopt the Norway,
Switzerland or the Canadian model, each of whichwill have different implications for the UK and the EU in
terms of their varied AMLobligations. It will be in the commercial interests of the UK Government to not cull
the fourthAML directive (which was due to become law in June 2017)but to transpose it into law.
Journalof Money Laundering
Vol.21 No. 1, 2018
© Emerald Publishing Limited
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