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ML 7.2 Compliance monitoring

ML 7.2.1G

SYSC 3.2.6 R (Compliance) requires a relevant firm to take reasonable care to establish and maintain appropriate systems and controls for compliance with its regulatory obligations and to counter the risk that it might be used to further financial crime. This section amplifies particular aspects of the rule in SYSC. It does not, however, limit the application of the rule, the effect of which is that, where financial crime is concerned, firms must also comply with other Handbook requirements (in particular, ML) and their legal obligations under the Money Laundering Regulations and the Proceeds of Crime Act 2002.1

ML 7.2.2E
  1. (1)

    A relevant firm should establish and maintain arrangements under SYSC 3.2.6 R which include requirements that:

    1. (a)

      at least once in each calendar year, the relevant firm commission a report from its MLRO which:

      1. (i)

        assesses the relevant firm's compliance with this sourcebook;

      2. (ii)

        indicates, in particular, the way in which new findings under ML 5 (Using national and international findings) have been used during the year; and

      3. (iii)

        gives the number of reports made in accordance with ML 4.1 (Internal reporting) by staff of the relevant firm, dealing separately, if appropriate, with different parts of the relevant firm's business;

    2. (b)

      the relevant firm's senior management consider the report; and

    3. (c)

      they take any necessary action to remedy deficiencies identified by the report.

  2. (2)

    Contravention of (1) may be relied on as tending to establish contravention of SYSC 3.2.6 R.

ML 7.2.3G

Figures for internal reports should be broken down, if appropriate, in the MLRO's report. The purpose of the report is to enable a relevant firm's senior management to assess whether internal reports are being made whenever required by ML 4.1.2 R, and that an overall figure which seems satisfactory does not conceal inadequate reporting in a particular part of the relevant firm's business. Relevant firms will need to use their judgement how the MLRO should be required to break down the figures in order to achieve this aim.