SYSC 6.3 Financial crime

"Money laundering risk" is the risk that a firm may be used to further money laundering. Failure by a firm to manage this risk effectively will increase the risk to society of crime and terrorism.

A firm may also have separate obligations to comply with relevant legal requirements, including the Terrorism Act 2000, the Proceeds of Crime Act 2002 and the Money Laundering Regulations. SYSC 6.1.1 R and SYSC 6.3.1 R to SYSC 6.3.10 G are not relevant for the purposes of regulation 76(6) or 86(2)5 of the Money Laundering Regulations, section 330(8) of the Proceeds of Crime Act 2002 or section 21A(6) of the Terrorism Act 2000.

The FCA, when considering whether a breach of its rules on systems and controls against money laundering has occurred, will have regard to whether a firm has followed relevant provisions in the guidance for the United Kingdom financial sector issued by the Joint Money Laundering Steering Group.

In identifying its money laundering risk and in establishing the nature of these systems and controls, a firm should consider a range of factors, including:

1. (1)

   its customer, product and activity profiles;

2. (2)

   its distribution channels;

3. (3)

   the complexity and volume of its transactions;

4. (4)

   its processes and systems; and

5. (5)

   its operating environment.

A firm should ensure that the systems and controls include:

1. (1)

   appropriate training for its employees in relation to money laundering;

2. (2)

   appropriate provision of information to its governing body and senior management, including a report at least annually by that firm's money laundering reporting officer (MLRO) on the operation and effectiveness of those systems and controls;

3. (3)

   appropriate documentation of its risk management policies and risk profile in relation to money laundering, including documentation of its application of those policies (see SYSC 9);

4. (4)

   appropriate measures to ensure that money laundering risk is taken into account in its day-to-day operation, including in relation to:

   1. (a)

      the development of new products;

   2. (b)

      the taking-on of new customers; and

   3. (c)

      changes in its business profile; and

5. (5)

   appropriate measures to ensure that procedures for identification of new customers do not unreasonably deny access to its services to potential customers who cannot reasonably be expected to produce detailed evidence of identity.

The job of the MLRO within a firm is to act as the focal point for all activity within the firm relating to anti-money laundering. The FCA expects that a firm's MLRO will be based in the United Kingdom.

3The FCA provides guidance on steps that a firm can take to reduce the risk that it might be used to further financial crime in FC (Financial crime: a guide for firms).