Anti-money laundering guidance for supervised businesses

AMLG1700 - Guidance for all sectors: Senior managers

7. Senior managers

A senior manager is an officer or employee who has sufficient knowledge of the business’s money laundering, terrorist financing and proliferation financing risk exposure and has sufficient authority to make decisions affecting its risk exposure. Examples include:

• A director, manager, company secretary, chief executive or member of the management body
• A partner in a partnership
• A sole practitioner
• A nominated officer (who may be referred to as a money laundering reporting officer (MLRO) i.e. an officer nominated by the business to receive disclosures of suspicious activity under section 330 POCA and section 21A TACT and report these to the National Crime Agency (NCA) where appropriate
• A compliance officer, i.e. an officer of the business with responsibility for overseeing the business’s compliance with the Regulations

Other individuals may fall into this category depending on the nature and structure of the business.

Senior managers play a crucial role in ensuring that their business complies with the Regulations and is not used for money laundering, terrorist financing or proliferation financing or any other illegal activity. They should ensure that enough resources are devoted to address the risk of money laundering, terrorist and proliferation financing faced by the business.

Important note: Where there has been a contravention of a relevant requirement under the Regulations HMRC may impose a civil penalty on a senior manager or criminally investigate a senior manager with a view to prosecution in certain circumstances. See AMLG1400 above for further information on imposing civil penalties on and criminal prosecution of officers of a business.

7.1 Responsibilities of senior managers

The Regulations set out specific requirements in relation to senior managers as follows:

• The business’s PCPs must be approved by a senior manager.
• A senior manager must approve the establishment, or continuation of a business relationship with a politically exposed person (PEP) or a family member or known close associate of a politically exposed person (see AMLG11650 for further guidance on PEPs).
• A senior manager must approve the establishment, or continuation of a business relationship with a person established in a a “FATF Call for Action country.”  A FATF call for action country” means a country named on the list of High-Risk Jurisdictions subject to a Call for Action published by the Financial Action Task Force as such list has effect from time to time
• See AMLG11640 for further information on FATF Call for Action countries.

7.2 Expectations of senior managers

In addition to the specific requirements of senior managers under the Regulations, HMRC has general expectations of senior managers regarding their conduct and engagement with HMRC.

HMRC expects senior managers to:

• Act with integrity in their management of the business and their dealings with HMRC. 

Important note: In the case of Accountancy Service Providers (ASPs) who carry on business as tax advisors, this includes an expectation that they will: Ensure any advice given to customers of their business does not contradict HMRC guidance, legislation or legal authorities. Take all reasonable steps to ensure that any tax related claims submitted to HMRC are genuine and valid. Ensure their advertising is not misleading in any way e.g. in relation to the criteria for a valid tax-related claim, the risks attached to making such a claim or give a false impression the business is endorsed by HMRC; and Comply with the HMRC standard for agents HMRC standard for agents - GOV.UK (www.gov.uk).

• Be fully engaged in the decision-making processes within the business around their risk assessment and policies controls and procedures (PCPs) and take ownership of the risk-based approach adopted by the business in respect of managing and mitigating the risks of the business being used for money laundering, terrorist financing or proliferation financing.
• Be open and transparent in any dealings with HMRC.
• Cooperate fully with HMRC in exercising its functions as a Supervisory Authority. This includes cooperating with any compliance intervention conducted by HMRC. A compliance intervention is a process by which HMRC check your business’s compliance with the regulations and could take the form of a visit to your business premises or be conducted by correspondence or telephone during which you will be asked to provide various information and evidence relevant to your compliance with the Regulations.
• Exercise due diligence when executing any change of beneficial ownership, appointing officers and managers or onboarding agents to ensure they would satisfy the requirements of the approval check or fit and proper test, whichever is applicable to your business sector, and are suitable to undertake that position even where there is no specific requirement under the Regulations. This should include as a minimum:
• Checking those potential BOOMs and agents who are working in the UK have the right to work in the UK; and
• Checking those potential BOOMs and agents do not have an unspent conviction for a relevant offence listed on schedule 3 of the Regulations.

 See AMLG1600 above for guidance on the approval check and fit and proper test.