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IFAs may escape full impact of wider laundering rules

IFAs may escape the full force of the extension of FSA money-laundering regulations aimed at covering pre-1994 financial services clients.

The regulator plans to extend the regulations and compel the financial services industry to ensure that they have adequate identification on file for clients on their books before 1994.

But the FSA says IFAs may not bear the full brunt of the extension as decisions will be made about establishing thresholds for certain groups.

Most IFAs are not regulated to handle client money, so the funds that they deal with usually come from UK banks in the form of cheques, with clients having already gone through the money-laundering clearance.

The FSA also says any extension of the regulations would be less onerous for IFAs because they tend to have long-running relationships with their clients and tend to keep better records of identification and current addresses.

Aifa, which will be having talks with the FSA before the regulator issues a consultation paper this autumn, says the removal of the 1994 exemption could potentially be damaging for IFAs.

Aifa technical officer Linda Chandler says: “It could be a real headache if all clients have to be revisited but if it is only active clients then it may not be that bad.”

FSA spokesman Patrick Humphris says: “We want this to be easily manageable and not a bureaucratic exercise.”


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