ML 1
Application
and Purpose
ML 1.1
Application
- 01/12/2004
ML 1.1.1
See Notes
(1)
This
sourcebook applies to every relevant
firm (see ML 1.1.2
R)
with respect to its relevant
regulated activities (see ML
1.1.4 R),
but there are special provisions in ML 8.1for sole
traders with no employees and authorised professional firms.
(2) Some provisions also relate to the money laundering reporting officer of
a relevant firm in
his capacity as an approved
person (see ML 7.1).
- 01/04/2005
- Past version of ML 1.1.1 before 01/04/2005
Who?
ML 1.1.2
See Notes
(1) In this sourcebook, "relevant firm" means every firm, except:
(b) a UCITS
qualifier.
(2) An incoming
firm is a relevant
firm, but only to the extent that it is conducting activities
from an establishment in the United
Kingdom.
- 01/12/2001
ML 1.1.3
See Notes
The scope of this sourcebook is very
wide. It includes all firms except:
(1) those within
the limited exception for firms concerned
only with certain insurance activities and UCITS qualifiers (see ML 1.1.2
R); in this respect, the chapter follows article 1 of the Money Laundering Directive (No.91/308/EEC
as amended by No 2001/97/EEC);
(2) those within
the exception for firms carrying
on any
insurance mediation activity in
relation to a general insurance
contract or pure
protection contract (see ML
1.1.4 R (1A)) or any
mortgage mediation activity (see ML
1.1.4 R (5)); in this respect,
the chapter follows articles 2(3)(h) and 2(3)(i) of
the Money Laundering Regulations 2003 (SI 2003/3075).
The scope extends
to incoming firms (such
as branches of institutions established elsewhere in the EEA), except those providing only cross border services in
the United Kingdom.
This is because the Directive is designed to apply on a "Host State" basis. ML does not apply with respect to the unregulated activities of
a firm, for
example money service business.- 01/04/2005
- Past version of ML 1.1.3 before 01/04/2005
What?
ML 1.1.4
See Notes
In this sourcebook, "relevant regulated activities" means any regulated activity apart
from:
(1A)
insurance mediation
activity in relation to a general
insurance contract or pure
protection contract;
(2)
long-term
insurance business which is outside the First Life Directive (and is not otherwise
a relevant regulated activity);
(3) business relating to contracts which
are within the Regulated
Activities Order only because they fall within paragraph (e)
of the definition of " contract
of insurance " in article 3 of that Order (see the Glossary );
(4)
(a) arranging, by the Society of Lloyd's, of deals in general insurance contracts written
at Lloyd's; and
(b) managing the underwriting capacity of
a Lloyd's syndicate as a managing agent at Lloyd's; and
- 01/06/2005
- Past version of ML 1.1.4 before 01/06/2005
Where?
ML 1.1.5
See Notes
This sourcebook applies only in relation
to activities carried on from an establishment maintained by the firm (or its appointed representative)
in the United Kingdom.
- 01/12/2001
ML 1.2
Purpose
- 01/12/2004
ML 1.2.1
See Notes
The purpose of this sourcebook is to
require relevant firms to
have effective anti-money
laundering systems and controls, in order to reduce the opportunities
for money laundering in
relation to relevant firms.
It is also to require relevant
firms to ensure that approved
persons exercise appropriate responsibilities in relation to
these anti-money laundering systems
and controls.
- 01/12/2001
ML 1.2.2
See Notes
Section 2 of the Act (The Authority's general duties) sets
out the regulatory objectives of
promoting market confidence and public awareness, protecting consumers and reducing financial crime. The reduction
of financial crime objective
is the most important to this sourcebook. One aspect of the reduction of financial crime objective
is the risk of the businesses of relevant
firms being used in connection with offences which involve handling
the proceeds of crime. It follows that an effective and proportionate regulatory
regime is important in reducing the extent to which it is possible for the
businesses carried on by relevant
firms to be used for money
laundering. These rules and
compliance with them will also help the FSA to
meet the objective of maintaining market confidence, by reducing the risks
posed to the financial community by money
laundering. As to the public awareness objective, this sourcebook
is designed to assist relevant
firms and, through them, the public at large, to be better informed
about the safeguards for the financial
system provided by effective anti-money laundering systems and controls. Consumers are better protected
if relevant firms are
able to protect themselves against criminal activity and to record the steps
they have taken for that purpose.
- 01/12/2001
ML 1.2.3
See Notes
This sourcebook provides support, in
relation to money laundering,
for certain other parts of the Handbook,
mainly:
(2) the Statements of Principles and Code of Practice for Approved Persons (APER), in particular Statements of Principle 2
and 7;
(4) the Training and Competence sourcebook
(TC).
- 01/12/2001
ML 1.2.4
See Notes
This sourcebook relates to regulatory
requirements, as opposed to requirements imposed by the criminal law. It is,
therefore, not relevant guidance for the purposes of regulation 3(3) of the Money Laundering Regulations or
section 330(8) of the Proceeds of
Crime Act 2002.
- 01/03/2004
ML 1.2.5
See Notes
In assessing a relevant firm's compliance with the requirements
of this sourcebook, the FSA will
have regard to the relevant provisions of the Joint Money
Laundering Steering Group's Guidance Notes for the Financial Sector.
- 01/03/2004
ML 2
General money laundering duties
ML 2.1
Duty to have arrangements and to appoint a money laundering reporting officer
- 01/12/2004
ML 2.1.1
See Notes
A relevant firm must set up and operate arrangements, including the appointment of a money laundering reporting officer (MLRO) in accordance with the duty in ML
7, which are designed to ensure that it, and any appointed representatives that act on its behalf, are able to comply, and do comply, with the rules in this sourcebook.
- 01/12/2001
ML 2.1.2
See Notes
The duties of the MLRO are set out in full in ML
7. The MLRO is responsible for the oversight of the relevant firm's anti-money laundering activities and is the key person in the relevant firm's implementation of anti-money laundering strategies and policies.
- 01/12/2001
ML 2.1.3
See Notes
If a relevant firm permits or requires an appointed representative to carry on particular relevant regulated activities on its behalf, the relevant firm's duty to comply with this sourcebook and the MLRO's duties set out in ML
7 also apply to the activities of those appointed representatives.
- 01/12/2001
ML 3
Identification
of the client
ML 3.1
The duty
- 01/12/2004
Purpose and meaning of "client"
ML 3.1.1
See Notes
The
purpose of this chapter is to ensure that relevant firms carry out the identification
of clients.
The chapter also makes clear that relevant
firms must not, in general, carry out relevant regulated activities, or agree
to do so, for a client or
potential client unless
the relevant firm has
taken reasonable steps to check that client's identity.
In this sourcebook "client"
is defined differently from elsewhere in the Handbook and relevant firms should take care to ensure
that they use the correct definition. There are special provisions in this
chapter for cases where the person with
whom the relevant firm has
contact is acting for another. Broadly, the relevant firm has to enquire into the identity
of both persons,
unless a relevant exemption enables it to focus solely on the person it is actually
in contact with.
- 01/12/2001
Meaning of "transaction"
ML 3.1.2
See Notes
"Transaction"
in this sourcebook includes the giving of advice, and thus has a wide meaning
throughout this sourcebook. Certain sorts of transaction are exempted from these requirements.
These include cases where the transaction is
of relatively small value or the person has
been vouched for by another person who
can be relied on to have carried out these checks himself. But the various
exemptions from the requirement are all subject to the overriding condition
that there is nothing in place to put the relevant firm on enquiry ("knowledge or suspicion")
in the money laundering context.
- 01/12/2001
Identification of the client: the duty
ML 3.1.3
See Notes
(1) A relevant
firm must take reasonable steps to find out who its client is by obtaining
sufficient evidence of the identity of any client who comes into contact with the relevant firm to be able
to show that the client is
who he claims to be.
(2) If the client with whom a relevant firm has contact is, or appears
to be, acting on behalf of another, the obligation in (1) is to obtain sufficient
evidence of both their identities.
(2A) If the client, or the person on whose behalf he is acting, engages
in money service business and
is registered with the Commissioners for HM Revenue
and Customs, sufficient
evidence of identity must include the registered number, within the meaning
given by regulation 9(2) of the Money
Laundering Regulations, of the client or the person on whose behalf he is acting.
- 21/04/2005
- Past version of ML 3.1.3 before 21/04/2005
Financial exclusion
ML 3.1.5
See Notes
The guidance in ML
3.1.5 G to ML
3.1.7 G aims to help relevant
firms ensure that, where people cannot reasonably be expected
to produce detailed evidence of identity, they are not denied access to financial
services. Although a relevant
firm must always take reasonable steps to check who its client is, relevant firms will sometimes
be approached by clients who
are at a disadvantage, or who otherwise cannot reasonably be expected to produce
detailed evidence that helps to confirm identity. An example could be where
a person does
not have a passport or driving licence, and whose name does not appear on
utility bills.
- 01/12/2001
ML 3.1.6
See Notes
If a relevant firm has reasonable grounds to conclude
that an individual client is
not able to produce detailed evidence of his identity and cannot reasonably
be expected to do so, the relevant
firm may accept as identification evidence a letter or statement
from a person in
a position of responsibility who knows the client that tends to show that the client is who he says
he is, and to confirm his permanent address if he has one.
- 01/12/2001
ML 3.1.7
See Notes
Examples of persons in a position of responsibility include
solicitors, doctors, ministers of religion, teachers, hostel managers and
social workers.
- 01/12/2001
Identification of the client: timing
ML 3.1.8
See Notes
(1) A relevant
firm must comply with the obligation in ML 3.1.3 R (1) as soon as reasonably practicable after it has contact
with a client with
a view to:
(b) reaching an understanding (whether binding
or not) with the client that
it may carry out future transactions.
(2) If the client does not supply evidence of identity
within the time scale in (1), the relevant
firm must:
(a) discontinue any regulated activity it is conducting for him;
and
(b) bring to an end any understanding it
has reached with him;
unless in either
case the relevant firm has
informed the National Criminal Intelligence Service (NCIS).- 01/12/2001
ML 3.1.9
See Notes
Nothing in ML 3.1.8 R (2) requires a relevant
firm to continue with a transaction which
conflicts with its obligations, if any, in relation to rights of a third party.
- 01/12/2001
ML 3.2
The exceptions
- 01/12/2004
ML 3.2.1
See Notes
(1) This section sets out circumstances in
which:
(a) the duty in ML 3.1.3 R (1) (Identification of the client: the duty) need not
be complied with; or
(b) the relevant
firm is required to take reasonable steps to establish the identity
of a person for
whom the client is
acting.
(1A) None of the rules in this section applies if the relevant firm:
(a) knows or suspects; or
(b) has reasonable grounds to know or suspect;
in accordance
with (2) that the client or
the person on
whose behalf he is or appears to be acting is engaged in money laundering.(2) The relevant
firm will be taken to know or suspect or to have reasonable
grounds to know or suspect as set out in (1A) if any member of the staff handling
the transaction or
potential transaction or
managerially responsible for it knows or suspects or has reasonable grounds
to know or suspect.
- 01/12/2002
When the duty to identify does not apply
ML 3.2.2
See Notes
The duty in ML 3.1.3 R (1) (Identification of the client: the duty) does not
apply if:
(1) the client is
also:
(b) an authorised
professional firm; or
(c) is regulated by an overseas regulatory
authority (see ML
3.2.7 R)
and is based or incorporated in a country (other than an EEA State) whose law contains comparable
provisions to those contained in the Money
Laundering Directive; or
(2) the transaction is:
(a) a one-off transaction with a value of less than euro
15,000; or
(b) is one of a number of transactions which are related and, when
taken together, have a value of less than euro 15,000; or
(3) with a view to carrying out a one-off transaction, the client (other than a money service operator)
is introduced to the relevant
firm by a person who
has given the relevant
firm a written assurance that in all such cases he obtains and
records identification evidence, and:
(a) the person who
has given the written assurance is a credit
institution or financial
institution covered by the Money
Laundering Directive, or an authorised professional firm, or an entity
undertaking comparable activities in an EEA
State; or
(b) the person is
regulated by an overseas regulatory authority (see ML
3.2.7 R) and is based or incorporated in a country (other than an EEA State) whose law contains
comparable provisions to those contained in the Money Laundering Directive; or
(4) the proceeds of a one-off transaction;
(a) are to be payable to the client but are then to
be invested on his behalf;
(b) are to be the subject of a record; and
(c) can thereafter only be reinvested on
his behalf or paid directly to him; or
(5) when the transaction concerns a long-term insurance contract:
(a) taken out in connection with a pension scheme relating
to the client's employment
or occupation, if the policy contains
no surrender clause and cannot be used as security for a loan; or
(b) where the premium is a single payment of no more than
euro 2,500; or
(c) where the premium payments do not exceed euro 1,000
in any calendar year.
- 01/03/2004
ML 3.2.3
See Notes
A relevant
firm is expected to take reasonable steps to determine whether
or not the client falls
within the exceptions in ML 3.2.2 R (1) and ML 3.2.2 R (3)(b).
- 01/12/2001
Where the client is acting for another person
ML 3.2.5
See Notes
Where the client acts, or appears to act, other than
in the circumstances covered by ML 3.2.2 R (1) and ML 3.2.2 R (3) for another person, the relevant firm must take
reasonable steps for the purpose of establishing the identity of that person.
- 01/03/2004
Relevant overseas regulatory authorities
ML 3.2.7
See Notes
An overseas regulatory authority is relevant
for the purposes of ML 3.2.2 R (3)(b) and ML
3.2.5 R if
it falls within section 82 of the Companies Act 1989 (Request for assistance
by overseas regulatory authority), in so far as it exercises the kind of regulatory
functions described in that section.
- 01/12/2001
ML 4
Reporting
ML 4.1
Internal reporting
- 01/12/2004
ML 4.1.1
See Notes
This
section deals with the reporting to the firm's MLRO or a person authorised by the
Director General of NCIS of
knowledge or suspicions within the relevant
firm about money
laundering.
- 01/03/2004
ML 4.1.2
See Notes
(1) A relevant
firm must take reasonable steps to ensure that any member of
staff who handles, or is managerially responsible for handling, transactions which may
involve money laundering makes
a report promptly to the MLRO or
a person authorised
by the Director General of NCIS ,
within the same firm or group, if he:
(a) knows or suspects; or
(b) has reasonable grounds to know or suspect;
that a person is engaged in money laundering.(2) The steps to be taken under (1) include
establishing and maintaining arrangements for disciplining any member of staff
who fails, without reasonable excuse, to make a report of the kind envisaged
in this section.
- 01/03/2004
ML 4.1.3
See Notes
A relevant
firm may wish to set up internal systems that allow its staff
to consult with their line manager before sending a report to the MLRO. If a relevant firm sets up
such systems, it should ensure that they are not used to prevent reports reaching
the MLRO whenever
staff have stated that they have knowledge or suspicion that a transaction may involve money laundering.
- 01/12/2001
ML 4.1.4
See Notes
(1) The duty in ML 4.1.2
R (Internal reporting) does not apply where the relevant firm is a professional legal adviser
and the knowledge or suspicion or the reasonable grounds for knowing or suspecting
are based on information or other matter which came to it in privileged circumstances.
(2) Information or other matter comes to
a professional legal adviser in privileged circumstances if it is communicated
or given to the adviser:
(a) by (or by a representative of) its client
in connection with the giving by the adviser of legal advice to the client;
or
(b) by (or by a representative of) a person seeking legal advice
from the adviser; or
(c) by a person in connection with legal proceedings
or contemplated legal proceedings.
(3) The privileged circumstances in (2) do
not apply to information or other matter which is communicated or given with
a view to furthering a criminal purpose or in contravention of a provision
of the regulatory system.
(4) "Professional legal adviser" includes
any person in
whose hands information or other matter may come in privileged circumstances.
- 01/03/2004
ML 4.2
MLRO access to know your business information
- 01/12/2004
ML 4.2.1
See Notes
(1) A relevant
firm must take reasonable steps to give its MLRO, or any person to whom the MLRO's duties have been delegated, access
to any know your business
information it has.
(2)
Know
your business information in (1) is information about:
(a) the financial circumstances of a client or any person on whose behalf
the client has
been acting or is acting; and
(b) the features of the transactions which the relevant firm has entered into with or for
the client (or
that person).
- 01/12/2001
ML 4.2.2
See Notes
In order to do his job properly, the MLRO has to decide whether
to make a report to NCIS.
In most cases, before taking the decision to make a report, the MLRO is likely to need
access to a relevant firm's know your business information.
- 01/12/2001
ML 4.2.3
See Notes
A relevant
firm is not required to increase the amount of information it
gathers and keeps about its clients in
the normal course of its business. Rather, a relevant firm should use its existing client information effectively
by making such information readily available to its MLRO.
- 01/12/2001
ML 4.3
External reporting
- 01/12/2004
ML 4.3.1
See Notes
The purpose of this section is to ensure
that reports made to the MLRO are
considered and that, where appropriate, a report is made available to NCIS. The duty to make
external reports is one of the functions that some groups or larger relevant firms may decide can be delegated
by their MLRO to
suitably qualified staff, as described in ML 7.1.3
G.
- 01/12/2001
ML 4.3.2
See Notes
(1) A relevant
firm must take reasonable steps to ensure that any report required
by ML 4.1.2 R (1) (Internal reporting),
other than a report made to a person authorised
by the Director General of NCIS,
is considered by the MLRO,
or his duly authorised delegate, and that if, having considered the report
and any relevant know your
business information to which he has sought access, the MLRO or his duly authorised
delegate:
(a) knows or suspects; or
(b) has reasonable grounds to know or suspect;
that a person has been engaged
in money laundering,
he reports promptly to NCIS.- 01/03/2004
ML 4.3.3
See Notes
(1) To take reasonable steps as required
by ML
4.3.2 R, the relevant firm should:
(a) require the MLRO to consider a report under ML 4.1.2 R (1) in the light of all
relevant information accessible to or reasonably obtainable by the MLRO;
(b) permit the MLRO to have access to any information, including know your business information,
in the relevant firm's possession
which could be relevant; and
(c) ensure that where the MLRO, or his duly authorised delegate knows
or suspects, or has reasonable grounds to know or suspect, that a person has been engaged
in money laundering,
he makes a report which is not subject to the consent or approval of any other person.
(2) Contravention of (1) may be relied on
as tending to establish contravention of ML
4.3.2 R.
(3) Compliance with (1) may be relied on
as tending to establish compliance with ML
4.3.2 R.
- 01/12/2002
ML 4.3.4
See Notes
A sole
trader with no employees who
knows or suspects, or has reasonable grounds to know or suspect, that a client of his, or the person on whose behalf
the client is
acting, is or has been engaged in money
laundering must make a report promptly to NCIS.
- 01/12/2002
ML 5
Using
national and international findings on material deficiencies
ML 5.1
Government and Financial Action Task Force findings
- 01/12/2004
ML 5.1.1
See Notes
The
purpose of this chapter is to enable government and Financial Action Task Force findings of inadequacy,
concerning the approach to money
laundering of individual countries or jurisdictions, to be brought
to bear on relevant firms' decisions
and arrangements.
- 01/12/2001
ML 5.1.2
See Notes
(1) A relevant
firm must take reasonable steps whenever this rule applies to ensure that it:
(a) obtains; and
(b) makes proper use of;
any government
or Financial Action Task
Force findings of the kind referred to in ML
5.1.3 R.(2) "Proper use" in (1) includes:
(a) applying the information in the circumstances
envisaged by ML 3.2.2 R (3)(b) (introduction
of client for one-off transaction) or ML 3.2.5 (2) (introduction by client
of a person on whose behalf he is acting);
(b) applying the information whenever first
obtained to know your business information;
(c) Disseminating the information in the
course of dealing with awareness and training under ML
6.
- 01/12/2001
ML 5.1.3
See Notes
The findings in ML 5.1.2 R (1) are any published notices:
(1) which are issued:
(b) by the Financial Action Task Force;
and
(2) which contain a finding or other conclusion
on the part of the government or a government department or the Financial Action Task Force:
(a) that it has examined the arrangements
for restraining money laundering in
a particular State or jurisdiction other than the United Kingdom; and
(b) that it has found those arrangements
to be materially deficient in comparison with one or more of the relevant,
internationally accepted, standards, including any recommendations published
by the Financial Action
Task Force, required of or recommended to States and jurisdictions.
- 01/12/2001
ML 5.1.4
See Notes
In order to assist relevant
firms, the Joint Money Laundering Steering Group (JMLSG) publishes
government, government department, or Financial
Action Task Force findings of the kind referred to in ML
5.1.3 R. This information can be
found on the JMLSG's website (www.jmlsg.org.uk) or accessed indirectly via
the FSA's website (www.fsa.gov.uk) or, in the case of Financial Action Task Force findings only,
via the Financial Action
Task Force's website (www.fatf-gafi.org). All relevant firms should check this information
regularly to ensure that they keep up to date with current findings.
- 01/03/2004
ML 6
Awareness
of and training for staff
ML 6.1
Purpose
- 01/12/2004
ML 6.1.1
See Notes
The
purpose of this chapter is to ensure that staff in relevant firms are:
(1) made aware of; and
(2) given regular training about;
what is expected
of them in relation to prevention of money
laundering, and what the consequences are for the relevant firm and for
them if they fall short of that expectation.- 01/12/2001
ML 6.2
Awareness
- 01/12/2004
ML 6.2.1
See Notes
A relevant
firm must take reasonable steps to ensure that staff who handle,
or are managerially responsible for the handling of, transactions which may involve money laundering are aware
of:
(1) their responsibilities under the relevant firm's arrangements
made under this sourcebook, including those for obtaining sufficient evidence
of identity, recognising and reporting knowledge or suspicion of money laundering and use
of findings of material deficiencies;
(2) the identity and responsibilities of
the MLRO or
a person authorised
by the Director General of NCIS;
(3) the law relating to money laundering, including the Money Laundering
Regulations and this sourcebook; and
(4) the potential effect, on the relevant firm, its employees and its clients, of any breach
of that law.
- 01/03/2004
ML 6.2.2
See Notes
(1) A relevant
firm should provide information, whether recorded in writing
or otherwise, which:
(a) covers the matters in ML 6.2.1
R;
(b) is brought to the attention of any member
of staff who starts to work in any capacity within a relevant firm which is covered by this sourcebook;
and
(2) Contravention of (1) may be relied on
as tending to establish contravention of ML 6.2.1
R.
(3) Compliance with (1) may be relied on
as tending to establish compliance with ML 6.2.1
R.
- 01/12/2001
ML 6.2.3
See Notes
Staff need to have an awareness of anti-money laundering legislation
in the United Kingdom,
including a clear understanding of their own potential criminal liability.
- 01/12/2001
ML 6.2.4
See Notes
Staff are likely to need information
about the ways in which their clients'
involvement in money laundering may
affect bank and other accounts and other assets, in particular if a relevant firm decides
it is unable to process transactions,
because of the risk of committing a money
laundering offence. They are also likely to need information
about the ways in which the relevant
firm may itself be at risk if (without the consent of NCIS) it processes transactions which involve
the proceeds of crime.
- 01/12/2001
ML 6.3
Training
- 01/12/2004
ML 6.3.1
See Notes
A relevant
firm must take reasonable care to provide appropriate anti-money laundering training
for its staff who handle, or are managerially responsible for the handling
of, transactions which
may involve money laundering.
- 01/12/2001
ML 6.3.2
See Notes
(1) In taking reasonable care for the purposes
of ML
6.3.1 R, the relevant firm should provide training which:
(a) deals with the law on money laundering, and the responsibilities
of staff under the relevant
firm's arrangements;
(b) is applicable to all staff who handle,
or are managerially responsible for the handling of, transactions which may involve money laundering (see ML 6.2.1
R); and
(c) takes place with sufficient frequency
to ensure that within any period of 24 months it is given to substantially
all of the staff referred to in (b).
(2) Contravention of (1) may be relied on
as tending to establish contravention with ML
6.3.1 R.
(3) Compliance with (1) may be relied on
as tending to establish compliance of ML
6.3.1 R.
- 01/12/2001
ML 6.3.3
See Notes
These requirements do not preclude a
rolling programme of training, under which training on different subjects
takes place on different dates.
- 01/12/2001
ML 7
The money
laundering reporting officer and other arrangements
ML 7.1
The money laundering reporting officer
- 01/12/2004
MLRO: approval by the FSA and role
ML 7.1.1
See Notes
A relevant firm has to appoint
an individual as its MLRO (see ML 7.1.5
R). Under section 59 of the
Act, the function of acting in the capacity of the MLRO has been specified as a controlled function (see SUP
10.1.13 R). As a consequence, any individual invited
to perform that function must be individually approved by the FSA, on the application
of the relevant firm,
before performing the function. The job of the MLRO is to act as the focal point within
the relevant firm for
the oversight of all activity relating to anti-money laundering. He needs to be senior,
to be free to act on his own authority and to be informed of any relevant
knowledge or suspicion in the relevant
firm. In turn he has to pass on issues to NCIS as he thinks appropriate. He can be
expected to liaise with NCIS on
any question whether to proceed with a transaction in
the circumstances.
- 01/12/2001
Firms within a group
ML 7.1.2
See Notes
If a relevant firm is part of a group, it may choose to appoint as its MLRO an individual who
performs that function for another relevant
firm within the group.
- 01/12/2001
Delegation by the MLRO to others
ML 7.1.3
See Notes
If a relevant firm that is a member of a group chooses the approach
in ML 7.1.2
G, it may wish to permit
the MLRO to
delegate anti-money laundering duties
to other suitably qualified individuals within the relevant firm . Similarly some relevant firms, particularly
those with a number of branches or offices in different locations, may wish
to permit the MLRO to
delegate such duties within the relevant
firm. Where anti-money
laundering tasks are delegated by a relevant firm'sMLRO, the FSA will expect the MLRO to take ultimate managerial responsibility
for ensuring that the duties imposed on the MLRO by this sourcebook are complied with.
The responsibilities to be discharged by the MLRO are set out in ML
7.1.11 R.
- 01/12/2001
MLRO as "nominated officer" under Money Laundering Regulations
ML 7.1.4
See Notes
If convenient, a relevant firm may decide that the same person can carry out the
responsibilities of the MLRO and
of the "nominated officer" under the Money
Laundering Regulations. "Nominated officer", under those Regulations,
has the meaning given by Regulation 7.
- 01/03/2004
Duty to appoint MLRO
ML 7.1.5
See Notes
A relevant
firm must appoint an individual as its MLRO and operate arrangements that are designed
to ensure that it and the MLRO comply
with the relevant obligations of this chapter.
- 01/12/2001
ML 7.1.6
See Notes
When a relevant firm appoints an individual to be
its MLRO,
it must choose someone who is employed within
the relevant firm,
or within another relevant
firm in the same group,
whether as part of its governing body, management or staff.
- 01/12/2001
Qualifications and resources of MLRO
ML 7.1.7
See Notes
So that he can carry out his controlled function effectively,
a relevant firm must
ensure that its MLRO:
(1) has a sufficient level of seniority within
the relevant firm;
and
(2) has sufficient resources, including sufficient
time and (if necessary) support staff.
- 01/12/2001
ML 7.1.8
See Notes
"Sufficient resources" should include
arrangements to apply in any temporary absence of the MLRO, who should take reasonable steps to
ensure the adequacy of such arrangements. An individual who performs the role
of MLRO for
a period of less than 12 weeks in a consecutive 12 month period does not need
approval by the FSA (see SUP
10.5.5 R (periods of less than 12 weeks)).
- 01/12/2001
ML 7.1.9
See Notes
A relevant
firm must ensure that its MLRO is
able to:
(1) monitor the day-to-day operation of its
anti-money laundering policies;
and
(2) respond promptly to any reasonable request
for information made by the FSA.
- 01/12/2001
ML 7.1.10
See Notes
(2) Contravention of (1) may be relied on
as tending to establish contravention of ML
7.1.9 R.
- 01/12/2001
Responsibilities of the MLRO
ML 7.1.11
See Notes
A relevant
firm must make its MLRO responsible
for:
(1) receiving internal reports under ML 4.1;
(2) taking reasonable steps to access any
relevant know your business
information;
(4) obtaining and using national and international
findings under ML
5;
(5) taking reasonable steps to establish
and maintain adequate arrangements for awareness and training (whether by
himself or someone else) under ML
6; and
- 01/03/2004
ML 7.1.12
See Notes
APER
4.7.2 E and APER
4.7.9 E make
provisions about the conduct of the MLRO,
to help determine whether the MLRO's
conduct complies with Statement
of Principle 7 concerning the conduct expected of the MLRO as an approved person.
- 01/12/2001
Duty to appoint MLRO when position vacant
ML 7.1.13
See Notes
If the position of MLRO falls vacant, the relevant firm must appoint another individual
as its MLRO.
- 01/12/2001
ML 7.1.14
See Notes
The obligation on a relevant firm to appoint an MLRO is in ML 2.1.1 R. That provision is limited to relevant
firms and does not apply:
(2) if the relevant firm is an incoming firm which is only providing cross border services (as
opposed to operating through an established branch) in the United Kingdom.
- 01/12/2001
ML 7.2
Compliance monitoring
- 01/12/2004
ML 7.2.1
See Notes
SYSC 3.2.6 R (Compliance)
requires a relevant firm to
take reasonable care to establish and maintain appropriate systems and controls
for compliance with its regulatory obligations and to counter the risk that
it might be used to further financial
crime. This section amplifies particular aspects of the rule in SYSC. It does not, however,
limit the application of the rule,
the effect of which is that, where financial
crime is concerned, firms must
also comply with other Handbook requirements
(in particular, ML)
and their legal obligations under the Money
Laundering Regulations and the Proceeds of Crime Act 2002.
- 01/03/2004
ML 7.2.2
See Notes
(1) A relevant
firm should establish and maintain arrangements under SYSC 3.2.6 R which include requirements that:
(a) at least once in each calendar year,
the relevant firm commission
a report from its MLRO which:
(i) assesses the relevant firm's compliance with this sourcebook;
(ii) indicates, in particular, the way in
which new findings under ML
5 (Using national and international
findings) have been used during the year; and
(iii) gives the number of reports made in accordance
with ML 4.1 (Internal reporting) by staff of the relevant firm, dealing
separately, if appropriate, with different parts of the relevant firm's business;
(b) the relevant
firm's senior management consider the report; and
(c) they take any necessary action to remedy
deficiencies identified by the report.
(2) Contravention of (1) may be relied on
as tending to establish contravention of SYSC 3.2.6 R.
- 01/12/2001
ML 7.2.3
See Notes
Figures for internal reports should be
broken down, if appropriate, in the MLRO's
report. The purpose of the report is to enable a relevant firm's senior management to assess
whether internal reports are being made whenever required by ML 4.1.2
R, and that an overall figure which seems satisfactory does not conceal
inadequate reporting in a particular part of the relevant firm's business. Relevant firms will need to use their judgement
how the MLRO should
be required to break down the figures in order to achieve this aim.
- 01/12/2001
ML 7.3
Record keeping arrangements
- 01/12/2004
ML 7.3.1
See Notes
SYSC 3.2.20 R (Records) requires a relevant firm to take reasonable care to
make and retain adequate records (including accounting records). This section
amplifies this requirement.
- 01/12/2001
ML 7.3.2
See Notes
(1) A relevant
firm must make and retain, for the periods specified in (2),
the following records:
(a) in relation to evidence of identity:
(i) a copy of the evidence of identity obtained
under ML
3; or
(ii) a record of where a copy of the evidence
of identity can be obtained; or
(iii) when it is not reasonably practicable
to comply with (i) or (ii), a record of how the details of the evidence of
identity can be obtained; and when it has concluded it should treat a client as financially
excluded ML
3.1.5 G to ML
3.1.7 G (Financial exclusion), a record of the reasons for doing so;
(b) a record containing details of every transaction carried out
by the relevant firm with
or for the client in
the course of regulated
activity;
(c) [deleted]
(e) when an MLRO has considered information or other
matter concerning knowledge or suspicion that another person has engaged in money laundering, but has not made a report
to NCIS under ML 4.3, a record of that information or other matter.
(2) The specified periods are:
(a) in relation to evidence of identity,
five years from the end of the relevant
firm's relationship with the client;
(b) in relation to transactions within (1)(b), five years from
the date when the transaction was
completed; and
(c) [deleted]
(d) in any other case, five years from the
obtaining of the information or the creation of the record.
(3) "Transaction"
in (2) does not include advice given to a client unless such advice is followed by
a transaction with
monetary value.
- 01/03/2004
ML 7.3.3
See Notes
Records kept under SYSC 3.2.20 R should include the dates when anti-money laundering training was given, the
nature of the training, and the names of the staff who received training;
and (in relation to anti-money
laundering monitoring) reports by the MLRO made in accordance with ML 4.3, and records of consideration of those reports and of any action
taken as a consequence.
- 01/12/2001
ML 8
Sole traders and authorised professional firms
ML 8.1
Application of this sourcebook
- 01/12/2004
Sole traders
ML 8.1.1
See Notes
The only provisions of this sourcebook which apply to a sole trader with no employees are those specified in ML 8.1.2 R.
- 01/12/2001
ML 8.1.2
See Notes
Application to certain sole traders (see ML 8.1.1 R)
| Chapter | Subject matter | Parts applicable to a sole trader with no employees | |
| ML 1 | Application and purpose | The whole chapter | |
| ML 2 | The general money laundering duties | The whole chapter | |
| ML 3 | Identification of the client | The whole chapter | |
| ML 4 | Reporting | Only ML 4.3.4 R applies | |
| ML 5 | Findings of deficiencies | The whole chapter | |
| ML 6 | Awareness and training | The whole chapter except ML 6.2.1 R (2) | |
| ML 7 | The MLRO and other arrangements | Only | |
| ML 7.2 | ML 7.3 | ||
| Except ML 7.2.2 E (1)(a) and ML 7.2.2 E (1)(b) and ML 7.2.2 E (2) | Except ML 7.3.2 R (1)(d) and ML 7.3.2 R (1)(e) | ||
| ML 8 | Sole traders and authorised professional firms | The whole chapter | |
- 01/12/2001
Authorised professional firms
ML 8.1.3
See Notes
This sourcebook does not apply to authorised professional firms when carrying on non-mainstream regulated activities.
- 01/12/2001
Transitional Provisions and Schedules
ML TP 1
Schedule
ML TP 1.1
Transitional Provisions
| (1) | (2) | (3) | (4) | (5) | (6) |
| Material to which the transitional provision applies | Transitional provision | Transitional provision: dates in force | Handbook provision: coming into force | ||
| 1 |
ML 2.1.1 R
ML 7.1.5 R | R |
(1) Paragraph (2) applies where, immediately before the
commencement
, there is in a
relevant firm
an individual who was appointed by the
relevant firm
before that date to act for it in connection with its responsibilities in relation to money laundering.
(2) If, on commencement , the individual in (1) is approved to perform the money laundering function , nothing in ML 2.1.1 R or ML 7.1.5 R requires the relevant firm to reappoint that individual as its MLRO . | From commencement | Commencement |
| 2 | ML 3 | R | Where, immediately before commencement , a relevant firm already has an established client relationship with any person, nothing in ML 3 requires the relevant firm to establish the identity of that client . | From commencement | Commencement |
| 3 | ML | G | Expired |
- 01/04/2005
- Past version of ML TP 1 before 01/04/2005
ML Sch 1
Record keeping requirements
- 01/12/2004
ML Sch 1.1
See Notes
| The aim of the guidance in the following table is to give the reader a quick over-all view of the relevant record keeping requirements. |
- 01/12/2004
ML Sch 1.2
See Notes
| It is not a complete statement of those requirements and should not be relied on as if it were. |
- 01/12/2004
ML Sch 1.3
See Notes
| Handbook reference | Subject of record | Contents of record | When record must be made | Retention period |
| ML 7.3.2 R (1)(a) | Customer identification | Full details of evidence of identity | As soon as reasonably practicable after first contact | 5 years from end of relationship with client |
| ML 7.3.2 R (1)(b) | Transactions | Full details | On effecting the transaction | 5 years from the date when the transaction was completed |
| ML 7.3.2 R (1)(d) | Internal and external reporting | Full details of actions taken | Once actions have been taken | 5 years from the creation of the record |
| ML 7.3.2 R (1)(e) | Information not acted upon | Full details of information considered by the MLRO but not made an external report | Once decision not to report has been made | 5 years from the obtaining of the information |
- 01/12/2004
ML Sch 2
Notification requirements
- 01/12/2004
ML Sch 3
Fees and other required payments
- 01/12/2004
ML Sch 3.1
See Notes
| There are no requirements for fees or other payments in ML. |
- 01/12/2004
ML Sch 4
Powers exercised
- 01/12/2004
ML Sch 4.1
See Notes
- 01/12/2004
ML Sch 4.2
See Notes
- 01/12/2004
ML Sch 5
Rights of action for damages
- 01/12/2004
ML Sch 5.1
See Notes
| The table below sets out the rulesin MLcontravention of which by an authorised person may be actionable under section 150 of the Act (Actions for damages) by a person who suffers loss as a result of the contravention. |
- 01/12/2004
ML Sch 5.2
See Notes
| If a "Yes" appears in the column headed "For private person?", the rulemay be actionable by a "private person" under section 150 (or, in certain circumstances, his fiduciary or representative; see article 6(2) and (3)(c) of the Financial Services and Markets Act 2000 (rights of Action) Regulations 2001 (SI 2001 No 2256)). A "Yes" in the column headed "Removed" indicates that the FSA has removed the right action under section 150(2) of the Act. If so, a reference to the rulein which it is removed is also given. |
- 01/12/2004
ML Sch 5.3
See Notes
| The Column headed "For other person?" indicates whether the rulemay be actionable by apersonother than a private person (or his fiduciary or representative) under article 6(2) and (3) of those Regulations. If so, an indication of the type of person by whom the rulemay be actionable is given. |
- 01/12/2004
ML Sch 5.4
See Notes
- 01/12/2004
ML Sch 6
Rules that can be waived
- 01/12/2004