Responsibilities of Senior Management of Relevant Persons under MLR 2017

The Senior Management of a Relevant Person under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) is an officer or an employee that has sufficient knowledge of its Money Laundering, Terrorist, and Proliferation Financing (MLTPF) risk exposure and has sufficient authority to take decisions regarding the same. In this infographic, we have discussed the responsibilities of Senior Management in overseeing the effective designing, adoption, and implementation of the Relevant Person’s financial crime compliance program.

The responsibilities of Senior Management are as follows:

Approving AML/CTF/CPF Policies, Controls, and Procedures:

Senior Management must approve the Anti-Money Laundering (AML), Counter-Terrorist Financing (CTF) and Counter-Proliferation Financing (CPF) Policies, Controls, and Procedures of the Relevant Person. This helps the Senior Management ensure that they are properly formulated, effectively implemented, and aligned with the Relevant Person’s AML/CTF/CPF obligations. Senior Management also has the responsibility to ensure that the Relevant Person has strong systems and controls in place, in order to effectively combat financial crime risks.

Appointing AML/CTF/CPF Compliance Officer and Nominated Officer:

Senior Management, along with the board of directors or any other management body is responsible for appointing the AML/CTF/CPF compliance officer and the Nominated Officer. The AML/CTF/CPF Compliance Officer is in-charge of overseeing the entire AML/CTF/CPF processes for the Relevant Person, while the Nominated Officer is responsible for receiving internal Suspicious Activity Report (SAR) and submitting external SARs to UK’s Financial Intelligence Unit.

Receiving AML/CTF/CPF Compliance Officer’s Report

Senior Management must receive information from the Relevant Person’s AML/CTF/CPF Compliance officer about the operation, implementation, and effectiveness of its AML/CTF/CPF Policies, Controls, and Procedures at least annually. This helps Senior Management stay updated regarding the functioning of the Relevant Person’s financial crime risk management systems and adopt necessary remedial measures whenever a vulnerability is found.

Receiving Requests for Permission to Establish or Continue Business Relationships with Certain High-Risk Customers:

The approval of Senior Management is a necessary step before onboarding or continuing business relationship with certain types of high-risk customers, which include:

Customers from high-risk third countries
Customers with whom correspondent relationship is being established
Customers that are Politically Exposed Persons (PEPs)

In case of PEP, Senior Management must also be informed before a Relevant Person pays any sum under an insurance policy of which the beneficiary is a PEP or family members or known close associates of PEPs.

Understanding and Managing MLTPF Risk Exposure:

To be able to take informed decisions regarding risk taking, specifically while onboarding high-risk customers, Senior Management must ensure that MLTPF Business-Wide Risk Assessment (BWRA) is conducted, and Relevant Person’s MTPF risk exposure and risk appetite is properly defined. Senior Management must be aware of the MLTPF risk exposure and risk appetite of the Relevant Person, in order to ensure that both are aligned.

Setting a Culture of AML/CTF/CPF Compliance:

The tone of compliance is set from the top. Senior Management must ensure that its actions, policies, and decisions are all geared towards setting a culture of AML/CTF/CPF compliance throughout the organisational structure of the Relevant Person. Therefore, it must be fully engaged in key decision-making processes regarding AML/CTF/CPF compliance function of the Relevant Person.

Allocating Adequate Resources for AML/CTF/CPF Program

Senior Management is responsible for ensuring that appropriate resources are allocated for the effective functioning of the AML/CTF/CPF Program of the Relevant Person.

Ensuring Independent AML/CTF/CPF Audit:

Senior Management must ensure that an independent audit is conducted to examine the effectiveness of the Relevant Person’s AML/CTF/CPF Policies, Controls, and Procedures, and adopt any remedial measures or improvements whenever required.

Responsibilities of Senior Management: Final Thoughts

By fulfilling the responsibilities discussed in this infographic, Senior Management plays an indispensable role in protecting the Relevant Person against financial crime risks and ensuring compliance with its obligations under UK’s AML/CTF/CPF Regime.