ECSH33705 - Records testing: relevant period to test

To confirm a business is complying with the relevant requirements of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), you will need to look at business records covering a representative period. You must consider what period would be reasonable on a case-by-case basis, taking into account:

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

You can extend your initial sample at any time to test new or emerging risks.

Where a previous compliance check has been carried out, you need to exclude the period previously tested. For example, if a business was warned to correct non-compliance on 1 May 2022, and it was given 3 months to implement the required actions to become compliant with MLR 2017, you should test the period following the warning to demonstrate that remedial action has been effective.

You should make it clear what period of records you need to see when corresponding with the business, for example in your confirmation of visit letter.

The period you select needs to be representative of the trading of the business. This will help you to obtain sufficient evidence of any occurrence and regularity of non-compliance, and the amount of money potentially exposed to money laundering and terrorist financing (ML/TF) activity as a result of a breach.

Due to record retention periods, it would be unlikely that you would test a period of longer than five years. Remember, the business is unlikely to keep supporting records for longer than the statutory period. If you do exceptionally need to test a longer period, you will need to agree with the business what records are available.

 

Case study

You are conducting a compliance check with an art market participant (AMP) auction house that facilitates the sales of items that are both in and out of scope ofMLR 2017. You establish it conducted a fine art auction in June last year which included works of art which were in scope of MLR 2017. You therefore ask to see the records for a period that covers when it conducted this auction, as this is where relevant activity has taken place. Remember, since AMPs were only in scope of MLR 2017 from 10 January 2020, you can only ask for records from that date as they were not required to conduct any checks or keep records under MLR 2017 before then.