There was overwhelming support from the industry and other respondents for these proposals. The FSA will remove the existing detailed rules on anti-money laundering controls in their entirety, replacing them with high-level requirements for firms to have their own risk-based controls on money laundering. This reflects the FSA's wish to provide firms with greater flexibility to meet their anti-money laundering obligations and an increased focus on senior management responsibility to do so. This should encourage firms to target resources on activities which are most likely to result in deterring and detecting money laundering.

Philip Robinson, the FSA's Financial Crime Sector Leader, said: "The changes in our Handbook do not mean we are going soft on money laundering, they are part of delivering a more proportionate and effective regime to counter money laundering. We believe that firms will increasingly be able to target their resources where they will make the most difference in fighting crime."

Existing government regulations will remain in place, supplemented by industry guidance which is currently being reviewed. The changes will come into effect at the beginning of March, but firms will have a transitional period until August 2006 to become fully compliant with the new rules.

The FSA's consultation paper last July proposed two other sets of changes to simplify and reduce the burden of regulation on firms; these were to their Training and Competence and Approved Persons regimes. Today's Policy Statement does not include feedback on these proposals. This is due to the need for the FSA to take into account the possible developments in the European Commission's measures in implementing the Markets in Financial Instruments Directive and the impact this may have on the two regimes. The FSA expects to publish feedback on these issues once the European position is clear and they have been able to determine how it may affect what they should do.

The Handbook review programme focuses on eliminating or changing requirements which are more restrictive than needed to achieve the FSA's statutory objectives, which do not deliver benefits to justify their costs, or which are not consistent with the FSA's focus on senior management responsibility. It forms part of the FSA's move towards a more principles-based approach to regulation.