AMLG11000 - Guidance for all sectors: Nominated Officers and Compliance Officers within your business
10. Nominated Officers and Compliance Officers within your business
You must appoint a Nominated Officer within your business. You may also need to appoint a Compliance Officer, depending on the size and nature of your business. Their respective responsibilities are set out in sections 10.1 and 10.2 below.
You must inform HMRC of the name of the Nominated Officer and any Compliance Officer within 14 days of their appointment, whether this is a first or subsequent appointment. HMRC also expects you to notify it of any deputies appointed to these roles within 14 days of their appointment.
What if I am a sole practitioner or trader?
If you are a sole practitioner or trader with no employees and do not act in association with anyone else, you do not need to appoint a separate Nominated Officer or Compliance Officer. However, you will personally be responsible for fulfilling the duties of the roles and complying with the Regulations and obligations for reporting suspicious activity under POCA and TACT. See AMLG11100 for further information on POCA requirements in relation to SARs).
What if my business is part of a group?
Where a business is part of a group of companies you may appoint one individual as the Nominated Officer or Compliance Officer for multiple entities in the group. In deciding whether this is appropriate, you should consider whether the relevant responsibilities can be effectively met by one individual. If each subsidiary has their own Compliance and/or Nominated Officer, then one person should have oversight of this at a group-wide level.
Are there any regulatory checks for the Nominated Officer and Compliance Officer?
Yes. The Nominated Officer, Compliance Officer and any deputies must pass either the fit and proper test or the approvals check, depending on the business sector.For more information on the fit & proper and approvals test, see AMLG1600.
Do the Nominated Officer and Compliance Officer need to be based in the UK?
HMRC expects the Nominated Officer and Compliance Officer to be based in the UK. They should be aware of the domestic risks of money laundering, terrorist financing and proliferation financing, as well as the international risks to which your business may be exposed and be readily available to be interviewed by HMRC if required. If you choose to appoint a nominated officer that is not based in the UK, HMRC will expect you to explain the reasons for that decision and demonstrate that your processes allow for those Officers to fully meet their obligations from outside the UK.
Do I need to appoint a deputy?
HMRC recommends that you appoint a suitable person from within your business as deputy Nominated Officer who will assume the responsibilities of that role during any periods when the Nominated Officer is absent. If your business has a Compliance Officer, you should also consider appointing a deputy Compliance Officer to take on their responsibilities when the Compliance Officer is absent for an extended period. A deputy will need to be included as a BOOM on your registration and undergo approvals/fit and proper testing as appropriate.
10.1 Nominated Officer
What are the duties of the Nominated Officer?
- The nominated officer plays a critical role in ensuring compliance with the Regulations. They are responsible for:
- Receiving disclosures: Accepting internal reports of suspicious activity from any employee in the business (under Part 7 of POCA and Part 3 of the Terrorism Act).
- Evaluating disclosures: Assessing whether the reported disclosure gives rise to knowledge, suspicion, or reasonable grounds to suspect money laundering or terrorist financing.
- Reporting to the NCA: completing and submitting a Suspicious Activity Report (SAR)to the NCA when appropriate (see AMLG11100 for further guidance on SARs).
- Requesting a Defence Against Money Laundering (DAML) or a Defence Against Terrorist Financing (DATF), and ensuring no transaction proceeds unlawfully: If you wish to go ahead with a suspicious transaction or start a business relationship with the customer who you have made a report about, then the Nominated Officer must seek ‘appropriate consent’ under POCA or ‘prior consent’ under TACT from the UK Financial Intelligence Unit (UKFIU). Failure to do so may result in you or your organisation committing a money laundering or terrorist financing offence. This consent, (if granted) will constitute a defence to a money laundering or terrorist financing offence and can only be given by the UKFIU (part of the NCA). (See AMLG11100 on DAMLs.)
What to consider when appointing your Nominated Officer?
Your Nominated Officer should be someone who:
- Can be trusted with the responsibility.
- Is senior enough to have access to all your customer files and records.
- Has sufficient knowledge, skills and experience to be able to assess whether a SAR is appropriate.
- Can make independent decisions on activity and transactions and whether or not suspicious activity must be reported to the NCA.
Important note:
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10.2 Compliance officer
In addition to appointing a Nominated Officer, you may also need to appoint a Compliance Officer, depending on the size and nature of your business.
Does your business need to appoint a Compliance Officer?
You should assess whether it is appropriate to appoint a Compliance Officer based on your business’s exposure to money laundering, terrorist financing and proliferation financing risk, which should be documented in your risk assessment. You should also take into account this guidance. Generally, HMRC expects a larger or more complex businesses to appoint a Compliance Officer. Sole traders or small businesses with simple operations may not be required to do so, but monitoring compliance is still mandatory. (See AMLG11000 for further guidance on when to appoint a Compliance Officer).
What are the duties of a Compliance Officer?
The Compliance Officer will be responsible for the business’s compliance with the Regulations and should carry out regular audits on compliance. Their duties include:
- Reviewing of the effectiveness of the PCPs.
- Recommending and implementing improvements following such reviews.
- Ensuring compliance throughout the business (including subsidiaries and branches) with anti money laundering legislation and checking adherence to internal PCPs.
- Overseeing relevant employees i.e. persons involved in the identification of risk and maintaining controls and procedures, and ensuring those relevant employees are complying with the Regulations.
- Agent screening – assessing the skills, knowledge and expertise of any agents used by your business to carry out their functions effectively and assessing their conduct and integrity.
What to consider when appointing a compliance officer
The Compliance Officer must be:
- A member of the board of directors (or its equivalent management body if there is no board); or
- A member of senior management.
Can the Compliance Officer also be the Nominated Officer?
It is recommended that the Compliance Officer and Nominated Officer should not be the same person. This is because the Compliance Officer is responsible for reviewing how the business carries out its obligations, including reviewing the reporting of suspicious activity which is the responsibility of the Nominated Officer. However, in some businesses (particularly those that are smaller) it may not be practical to have two individuals carrying out these functions and a nominated officer may be suitable to also act as compliance officer. If your business considers it is not possible to appoint a separate individual to each role, you should be able to provide reasons for this decision.