What is the status and purpose of the Guidance?
POCA requires a court to take account of industry guidance that has been approved by a Treasury minister when considering whether a person within the regulated sector has committed the offence of failing to report where that person knows, suspects, or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.
Similarly, the Terrorism Act requires a court to take account of such approved industry guidance when considering whether a person within the financial sector has failed to report under that Act.
The ML Regulations also provide that a court must take account of similar industry guidance in determining whether a person or institution within the regulated sector has complied with any of the requirements of the ML Regulations.
When considering whether to take disciplinary action against an FSA-regulated firm in respect of a breach of the relevant provisions of SYSC, the FSA will have regard to whether a firm has followed relevant provisions in this guidance.
When considering whether to bring a criminal prosecution in relation to a breach of the ML Regulations, the FSA may also have regard to whether the person concerned has followed this guidance. The guidance will therefore be significant for individuals being prosecuted, or subject to regulatory action, in relation to their responsibility for firms' systems and controls and/or in relation to their personal actions: for example, why did they fail to disclose?
The guidance provides a sound basis for firms to meet their legislative and regulatory obligations when tailored by firms to their particular business risk profile. Departures from good industry practice, and the rationale for so doing, should be documented, and may have to be justified, for example to the FSA.
The purpose of the Guidance is to:
- outline the legal and regulatory framework for AML/CTF requirements and systems across the financial services sector;
- interpret the requirements of the relevant law and regulations, and how they may be implemented in practice;
- indicate good industry practice in AML/CTF procedures through a proportionate, risk-based approach;
- assist firms to design and implement the systems and controls necessary to mitigate the risks of the firm being used in connection with money laundering and/or the financing of terrorism.