The regulations come into effect on December 15 and include strict tests to ensure money services businesses and firms that help set up companies are not run for criminal purposes. They also require extra checks on high-risk customers, such as non face to face business and foreign heads of state.

However the new rules also reduce regulatory burdens in low risk areas. This means identity checks can be reduced where firms can rely on checks done by others – such as FSA authorized financial advisers and solicitors. Greater flexibility will also be introduced to record keeping rules so that companies can keep only the important details rather than whole documents.

The regulations are the result of consultation with law enforcement bodies and the private sector.

Finance & Leasing Association director general Stephen Sklaroff welcomed the news, but said the disjointed nature of the supervision of regulations could be a problem.

"We are pleased that the government has listened to many of our concerns and has adopted a risk-based approach in line with good regulatory principles. However, we are concerned that responsibility for supervision will sit with a number of separate authorities adopting different approaches. We call on supervisors to coordinate their efforts to ensure consistency of enforcement."