Money laundering and terrorist financing

1. The Proceeds of Crime Act 2002 requires you to submit a Suspicious Activity Report to the National Crime Agency if you know or suspect that a person is engaged in, or attempting, money laundering.

2. The Money Laundering Regulations 2007 apply to banks, building societies, credit unions. They also apply to other firms undertaking certain financial activities (see Schedule 1 of the Regulations). These will normally include investment managers and stockbrokers, e-money institutions, payment institutions, consumer credit firms offering lending services, financial advisors, investment firms, asset managers and those providing safety deposit services.

3. These regulations require you to apply risk-based customer due diligence measures and take other steps to prevent your services from being used for money laundering or terrorist financing.

4. the FCA require all authorised firms subject to the Money Laundering Regulations to meet additional but complementary regulatory obligation to apply policies and procedures to minimise their money laundering risk.

5. Your internal controls effectively monitor and manage your firm’s compliance with anti-money-laundering (AML) policies and procedures.

6. These controls need to be appropriate to the size of your firm, the products you offer, the parts of the world where you do business and types of customers who use your services.

The FCA also require that firms:

1. Give overall responsibility for anti-money-laundering systems and controls to a director or senior manager. They should
   1. know about the money-laundering risks to your firm and make sure steps are taken to mitigate those risks effectively AND
   2. Appoint a Money Laundering Reporting Officer (MLRO), who is a focus for the firm’s AML activity.
2. The MLRO supervises the firm’s compliance with its AML obligations. If you are a sole trader with no employees you are not subject to this requirement.
3. Central to meeting your AML obligations is a risk assessment of your firm’s business as it will help you develop effective and proportionate prevention procedures.
4. As the risks change over time, your risk assessment will need to be kept up-to-date. Once these procedures are in place you will need to make sure that your employees are understand and comply with them.
5. You will also need to keep monitoring the procedures to ensure that they continue to be appropriate for your business as it develops, and that they work well.

the FCA have provided examples of good and poor practice in our Financial Crime: A Guide for Firms to help you in benchmarking your existing systems or creating new ones.

• https://www.handbook.fca.org.uk/handbook/document/FC1_FCA_20150427.pdf

• https://www.handbook.fca.org.uk/handbook/document/FC2_FCA_20150427.pdf

The Joint Money Laundering Steering Group has also produced guidance to help you in meeting your AML obligations. – The current Guidance is here –

1. pdf Part I = http://www.jmlsg.org.uk/download/9803
2. pdf Part II = http://www.jmlsg.org.uk/download/9804
3. pdf Part III = http://www.jmlsg.org.uk/download/9889

Brokers and insurers

1. Although mortgage brokers, general insurers and general insurance brokers are not subject to our AML rules and the Money Laundering Regulations, they still need systems and controls to prevent financial crime.

2. You are also subject to the Proceeds of Crime Act 2002. Without these controls (e.g. no process for reporting knowledge or suspicions of money laundering) they will be at risk of committing money-laundering offences, therefore many mortgage and insurance brokers choose to implement controls like those adopted by firms subject to the Money Laundering Regulations and our AML rules.