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ML 4.1 Internal reporting

ML 4.1.1 G

This section deals with the reporting to the firm's MLRO or a person authorised by the Director General of NCIS of knowledge or suspicions within the relevant firm about money laundering.2

ML 4.1.2 R
  1. (1)

    A relevant firm must take reasonable steps to ensure that any member of staff who handles, or is managerially responsible for handling, transactions which may involve money laundering makes a report promptly to the MLRO or a person authorised by the Director General of NCIS , within the same firm or group, if he:

    1. (a)

      knows or suspects; or

    2. (b)

      has reasonable grounds to know or suspect;

    that a person is engaged in money laundering.21

  2. (2)

    The steps to be taken under (1) include establishing and maintaining arrangements for disciplining any member of staff who fails, without reasonable excuse, to make a report of the kind envisaged in this section.

ML 4.1.3 G

A relevant firm may wish to set up internal systems that allow its staff to consult with their line manager before sending a report to the MLRO. If a relevant firm sets up such systems, it should ensure that they are not used to prevent reports reaching the MLRO whenever staff have stated that they have knowledge or suspicion that a transaction may involve money laundering.

ML 4.1.4 R
  1. (1)

    The duty in ML 4.1.2 R (Internal reporting) does not apply where the relevant firm is a professional legal adviser and the knowledge or suspicion or the reasonable grounds for knowing or suspecting are based on information or other matter which came to it in privileged circumstances.

  2. (2)

    Information or other matter comes to a professional legal adviser in privileged circumstances if it is communicated or given to the adviser:

    1. (a)

      by (or by a representative of) its client in connection with the giving by the adviser of legal advice to the client; or

    2. (b)

      by (or by a representative of) a person seeking legal advice from the adviser; or

    3. (c)

      by a person in connection with legal proceedings or contemplated legal proceedings.

  3. (3)

    The privileged circumstances in (2) do not apply to information or other matter which is communicated or given with a view to furthering a criminal purpose or in contravention of a provision of the regulatory system.

  4. (4)

    "Professional legal adviser" includes any person in whose hands information or other matter may come in privileged circumstances.2

ML 4.2 MLRO access to know your business information

ML 4.2.1 R
  1. (1)

    A relevant firm must take reasonable steps to give its MLRO, or any person to whom the MLRO's duties have been delegated, access to any know your business information it has.

  2. (2)

    Know your business information in (1) is information about:

    1. (a)

      the financial circumstances of a client or any person on whose behalf the client has been acting or is acting; and

    2. (b)

      the features of the transactions which the relevant firm has entered into with or for the client (or that person).

ML 4.2.2 G

In order to do his job properly, the MLRO has to decide whether to make a report to NCIS. In most cases, before taking the decision to make a report, the MLRO is likely to need access to a relevant firm's know your business information.

ML 4.2.3 G

A relevant firm is not required to increase the amount of information it gathers and keeps about its clients in the normal course of its business. Rather, a relevant firm should use its existing client information effectively by making such information readily available to its MLRO.

ML 4.3 External reporting

ML 4.3.1 G

The purpose of this section is to ensure that reports made to the MLRO are considered and that, where appropriate, a report is made available to NCIS. The duty to make external reports is one of the functions that some groups or larger relevant firms may decide can be delegated by their MLRO to suitably qualified staff, as described in ML 7.1.3 G.

ML 4.3.2 R
  1. (1)

    A relevant firm must take reasonable steps to ensure that any report required by ML 4.1.2 R (1) (Internal reporting), other than a report made to a person authorised by the Director General of NCIS, is considered by the MLRO, or his duly authorised delegate, and that if, having considered the report and any relevant know your business information to which he has sought access, the MLRO or his duly authorised delegate:

    1. (a)

      knows or suspects; or

    2. (b)

      has reasonable grounds to know or suspect;

    that a person has been engaged in money laundering, he reports promptly to NCIS.1

  2. (2)

    In reporting to NCIS, an MLRO, or his duly authorised delegate, must have regard to any order under section 339 of the Proceeds of Crime Act 2002 prescribing the form and manner in which a disclosure must be made to NCIS and to any guidance issued by NCIS on the form and manner of reporting.2

ML 4.3.3 E
  1. (1)

    To take reasonable steps as required by ML 4.3.2 R, the relevant firm should:

    1. (a)

      require the MLRO to consider a report under ML 4.1.2 R (1) in the light of all relevant information accessible to or reasonably obtainable by the MLRO;

    2. (b)

      permit the MLRO to have access to any information, including know your business information, in the relevant firm's possession which could be relevant; and

    3. (c)

      ensure that where the MLRO, or his duly authorised delegate knows or suspects, or has reasonable grounds to know or suspect, that a person has been engaged in money laundering, he makes a report which is not subject to the consent or approval of any other person.1

  2. (2)

    Contravention of (1) may be relied on as tending to establish contravention of ML 4.3.2 R.

  3. (3)

    Compliance with (1) may be relied on as tending to establish compliance with ML 4.3.2 R.

ML 4.3.4 R

A sole trader with no employees who knows or suspects, or has reasonable grounds to know or suspect, that a client of his, or the person on whose behalf the client is acting, is or has been engaged in money laundering must make a report promptly to NCIS.1