Post-Legislative Scrutiny Memorandum: SAMLA

The SAMLA (Sanctions and Anti Money Laundering Act) represents the UK’s first efforts to increase its implementation of a global standard of AML policy.

Following its departure from the EU, the UK was forced to install its own AML framework to ensure it upheld the international AML guidelines determined by the Financial Action Task Force (FATF) and EU regulatory bodies.

The SAMLA is one of the UK’s key AML regulations that provides such a regulatory structure and imposes that:

• The UK continues to follow the sanctions regime of the United Nations ;
• National security and foreign policy objections have a methodology;
• AML and CTF policies are ordered and in line with contemporary global standards.

There are various other sanction-specific initiatives that the SAMLA was required to achieve:

• Ensuring that new sanctions are tailored to the issue they are targeted at;
• Delivering sanctions that can evolve in real-time to match global developments;
• Providing transparent Parliament analysis of new sanctions;
• Making sure compliance with sanctions is met and that they are adequately enforced;
• Creating protocols for the licensing of legal activity and for sanctions to be challenged;
• Maintaining human rights obligations.

To find out more about the nuances of these policies, click here.

Why is this Legislation Important?

The SAMLA is a pervasive policy, mainly because it was installed with just one region in mind. This meant that a truly comprehensive sanctions and AML framework could be created and optimized for operations in the UK.

Furthermore, the SAMLA did this without compromising European Union law. This ensured that it reflected much of the legislature denoting EU AML policy but remains a protective piece for UK money laundering prevention. 

• The UK did not need to follow European Union or United Nations models.
• It could create its own framework for sanctions.
• It can follow the Financial Action Task Force’s recommendations more closely.

Controversies of the Act

Through this policy, the UK called for greater transparency from its overseas territories, including known tax havens such as the Cayman and Virgin Islands. While this is a foundational step towards building better and clearer frameworks around British financial crime policy, this upset the status quo.

The SAMLA requires far greater transparency, particularly around ultimate beneficial owners (UBOs) of corporate institutions. Previously, these lists were held privately and never disclosed publicly.

The Post-Legislative Scrutiny of the SAMLA

On March 4th, the UK Foreign, Commonwealth and Development Office (FCDO) published its memorandum for the Sanctions and Anti Money Laundering Act of 2018. It brought together the UK’s sanctions framework and evaluated the efficacy of the policy’s implementation, including case studies of the UK’s sanctions on Russia.

Case Study:

In 2019, the UK government set its own Russian sanctions according to the SAMLA guidelines, designed to have consequences similar to the European Union’s sanction regimes on Russia.

Since the invasion of Ukraine in February 2024, however, the UK government has used the SAMLA to update the 2019 regulations over 20 times. The Russian sanctions evolved into the largest-ever regime on a significant power and were significantly streamlined by the Sanctions and Anti-Money Laundering Act.

The sanctions against Russia were estimated to have disabled roughly $400 billion of funds that would have fed directly into Putin’s war machine.

Russian sanctions included:

• Travel bans
• Russian oil exports
• Immobilization of Russian foreign assets
• Action taken against Russian arms suppliers

Result:

The Russia-Ukraine war is one of the most severe conflicts in modern history and acted as a rigorous test for the SAMLA. The implementation of the SAMLA was found to be a broad success. However, it determined that there were still ‘deficiencies in money laundering and terrorist financing risk assessments and understanding in the regulated sector’. These were described as a ‘common failing'.

This evidences the increasing necessity for AML services that provide an all-encompassing customer due diligence program. As this is a challenge many regulated industries face, companies should look to start outsourcing their customer due diligence programs to ensure they don’t break regulatory protocols. The memorandum also stated that the government was committed to ensuring the SAMLA and other UK AML/sanctions regimes are prepared to meet and solve the challenges of the future.

This involved setting new money laundering regulations (MLRs) that directly reflected the FATF’s guidelines. This is likely to include improved customer due diligence frameworks and thresholds.

If your business is facing challenges around AML, customer due diligence, and sanctions screening, then it might be time to find a partner that solves these issues. ComplyCube provides a range of leading services that streamline compliance efforts without compromising user experience.

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