ML 7
The money
laundering reporting officer and other arrangements
ML 7.1
The money laundering reporting officer
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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.
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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.
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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.
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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.
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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.
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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.
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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)).
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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.
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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.
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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
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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.
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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.
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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.
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ML 7.2
Compliance monitoring
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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.
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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.
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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.
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ML 7.3
Record keeping arrangements
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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.
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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.
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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.
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