ECSH31000 - Duties of a supervisor
As an anti-money laundering (AML) supervisor, HMRC:
- assesses the suitability of applications from businesses to engage in the activities it supervises.
- helps businesses comply with the requirements of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the payer) Regulations 2017 (MLR 2017); and
- inspects businesses to make sure they are meeting those requirements.
We safeguard entry to ensure only suitable persons are registered for supervision and help ensure businesses understand their risks and have appropriate systems and processes in place to protect themselves and their services from being exploited for money laundering, proliferation and terrorist finance.
The duties of a supervisor are as follows:
Risk based approach
- Regulation 17(1) MLR 2017 requires each supervisory authority to identify and assess the international and domestic risks of money laundering, proliferation and terrorist financing to which relevant persons it supervises are exposed.
- Regulation 17(4) MLR 2017 requires the supervisor to assign a risk rating to each supervised business.
- Regulation 46(2)(a) MLR 2017 requires a supervisor to adopt a risk-based approach to the exercise of its supervisory functions, informed by the risk assessments carried out under Regulation 17 MLR 2017.
Supervision
-
Regulation 46(1) MLR 2017 requires a supervisor
to effectively monitor the sectors it supervises and take necessary measures
for the purpose of
- securing compliance with the Regulations.
- securing that an application to register for supervision which is approved by the supervisor meets the requirements of Regulation 26(7).
- Regulation 46(2)(c) MLR 2017 requires a supervisor to base the frequency and intensity of its onsite and offsite supervision on the risk profiles prepared under Regulation 17(4) MLR 2017.
- Regulation 46(2)(d) MLR 2017 requires a supervisor to record its action in writing, including reasons for decisions not to act in a particular case.
- Regulation 46(3) MLR 2017 requires a supervisor determining its approach to the exercise of its supervisory functions, to take account of the degree of discretion permitted to relevant persons in taking measures to counter money laundering and terrorist financing.
-
Regulation 46(4) requires a supervisor, in
accordance with its risk-based approach, to take appropriate measures to
review:
- the risk assessments carried out by relevant persons
- the adequacy of relevant persons’ policies, controls and procedures, and the way they have been implemented.
Information and intelligence sharing
- Regulation 50(1) MLR 2017 requires a supervisor to take such steps as it considers appropriate to:
- co‑operate with other supervisory authorities, the Treasury and law enforcement authorities in relation to the development and implementation of policies to counter money laundering and terrorist financing.
- co‑ordinate activities to counter money laundering and terrorist financing with other supervisory authorities and law enforcement authorities.
Suspicious activity reports and reporting obligations
- Regulation 46(5) of MLR 2017 requires a supervisor which, in the course of carrying out any of its supervisory functions or otherwise, knows or suspects, or has reasonable grounds for knowing or suspecting, that a person is or has engaged in money laundering or terrorist financing to, as soon as practicable, inform the National Crime Agency (NCA).
Disclosures
- Regulation 46(2)(e) MLR 2017 requires a supervisor to take effective measures to encourage its own sector to report actual or potential breaches of the provisions of the MLR 2017 to it.
Gateways
- Regulation 52 MLR 2017 permits disclosures both from and to supervisory and law enforcement authorities for purposes connected with the discharge of their supervisory functions and for law enforcement purposes. Disclosure may be made to/by listed authorities including law enforcement, certain government agencies and other supervisors.
Information and guidance for the supervised population
- Regulation 17(9) MLR 2017 requires the supervisor to share information from the risk assessment it carries out under 17(1) MLR 2017, or from information provided to it by Home Office or HM Treasury, with its supervised population where that information will help businesses comply, unless to do so would not be compatible with the Data Protection Act or General Data Protection Regulation (GDPR).
- Regulation 47(1) MLR 2017 requires a supervisor to, in any way it considers appropriate, to make up to date information on money laundering and terrorist financing available to the businesses it supervises (its own sector) including on risks and indicators. We do this by publishing Understanding Risks and Taking Action documents on Gov.UK for each of the sectors we supervise.
Staff competence and training
- Regulation 46(2)(b) MLR 2017 requires a supervisor to ensure its employees and officers have access, both at its offices and elsewhere, to relevant information on the domestic and international risks of money laundering and terrorist financing which affect its supervised sectors. This must include certain relevant information from the Treasury, Home Office and National Crime Agency.
Record keeping and quality assurance
- Regulation 46(2)(d) MLR 2017 requires a supervisor to keep a record in writing of the actions it has taken in the course of its supervision, and of its reasons for deciding not to act in a particular case.
Reporting
- Regulation 51(1) MLR 2017 requires a supervisor to collect such information as it considers necessary for the purpose of performing its supervisory functions, including the information specified in Schedule 4 of the Regulations - which includes key metrics on supervisory activities.
- Regulation 46(2) MLR 2017 provisions (e) to (g) require a supervisor to encourage businesses to report actual or potential breaches of MLR 2017 to the supervisor, providing confidential channels and protecting the identity of the reporter.