7.3.6 Money laundering
FSMA gives powers to the FCA to make rules that aim to prevent and detect money laundering in connection with the carrying on of regulated activities by authorised persons. This does not apply to a society issuing withdrawable shares because it is not a regulated activity.
The Money Laundering Regulations 2007 do not apply to societies when they issue withdrawable share capital (see Regulation 4). This removes the burden of having to carry out identity checks on applicants and having to follow other procedures laid down by these regulations. Nevertheless, simple measures such as only accepting payment for community shares via a UK-based bank account or equivalent, are considered good practice.
Consumer societies that are members of Co-operatives UK have agreed to a Code of Best Practice on Withdrawable Share Capital, which requires them to establish the identity of any person investing more than £500 by requiring two separate forms of identification, one proving who the person is, and the other proving where they live.
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