Proliferation Financing

The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 which came into force in September 2022 have created a new obligation for regulated entities to identify, assess and mitigate the risk of proliferation financing. 

Key points to note:

  • “Proliferation financing” means the act of providing funds or financial services for use, in whole or in part, in the manufacture, acquisition, development, export, trans-shipment, brokering, transport, transfer, stockpiling of, or otherwise in connection with the possession or use of, chemical, biological, radiological or nuclear weapons, including the provision of funds or financial services in connection with the means of delivery of such weapons and other CBRN-related goods and technology, in contravention of a relevant financial sanctions obligation.
  • Non-compliance with sanctions relating to proliferation financing could result in reputational damage should a breach occur. It is also a criminal offence under the sanctions regulations.
  • To comply, notaries can create a new risk assessment specific to proliferation financing or incorporate proliferation financing into the existing AML/CTF risk assessments.
  • Notaries are also required to implement policies, controls, and procedures to mitigate the risks identified

More information is available from guidance published by the Financial Action Task Force (FATF) and HMT’s National Risk Assessment of Proliferation Financing.