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  4. Point in time
    2005-10-01

ML 1.1 Application

ML 1.1.1 R
  1. (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.

    6
  2. (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).

Who?

ML 1.1.2 R
  1. (1)

    In this sourcebook, "relevant firm" means every firm, except:

    1. (a)

      a firm whose only regulated activities are those specified in ML 1.1.4 R (1);

    2. (b)

      a UCITS qualifier.

  2. (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.

ML 1.1.3 G

The scope of this sourcebook is very wide. It includes all firms except:

  1. (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

  2. (2)

    those within the exception for firms carrying on any 2insurance mediation activity in relation to a general insurance contract or pure protection contract (see ML 1.1.4 R (1A)) or any 4mortgage 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).26

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.31

What?

ML 1.1.4 R

In this sourcebook, "relevant regulated activities" means any regulated activity apart from:

  1. (1)

    general insurance business;

  2. (1A)

    insurance mediation activity in relation to a general insurance contract or pure protection contract;4

  3. (2)

    long-term insurance business which is outside the First Life Directive (and is not otherwise a relevant regulated activity);

  4. (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 );2

  5. (4)
    1. (a)

      arranging, by the Society of Lloyd's, of deals in general insurance contracts written at Lloyd's; and2

    2. (b)

      managing the underwriting capacity of a Lloyd's syndicate as a managing agent at Lloyd's; and 2

  6. (5)

    mortgage mediation activity and administering a regulated mortgage contract5.2

Where?

ML 1.1.5 R

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.

ML 1.2 Purpose

ML 1.2.1 G

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.

ML 1.2.2 G

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.

ML 1.2.3 G

This sourcebook provides support, in relation to money laundering, for certain other parts of the Handbook, mainly:

  1. (1)

    the Principles (PRIN), especially PRIN 3;

  2. (2)

    the Statements of Principles and Code of Practice for Approved Persons (APER), in particular Statements of Principle 2 and 7;

  3. (3)

    Senior Management Arrangements, Systems and Controls (SYSC), in particular SYSC 3; and

  4. (4)

    the Training and Competence sourcebook (TC).

ML 1.2.4 G

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 2002.1

ML 1.2.5 G

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.1