Legal Information

Anti Money Laundering Policy

FINANCIAL CRIME FCA COMPLIANCE PROCEDURES MANUAL
GENERAL INTRODUCTION
Introduction
This Financial Crime Handbook sets out the compliance procedures operated by BRYAN GARNIER & CO. LIMITED AND BRYAN GARNIER ASSET MANAGEMENT LIMITED (“BRYAN GARNIER”) in order to ensure its compliance with the legal framework set up in the UK to prevent money laundering and terrorist financing. Money laundering, terrorist financing, fraud and the abuse of financial markets collectively provide the FCA’s definition of financial crime.
The policies and procedures recorded in this manual reflect UK market practice in that they embrace the combating of terrorist financing (“CTF”) as well as anti-money laundering (“AML”) and the manual should therefore be read throughout as embracing both types of crime.
This Manual also refers to the Joint Money Laundering Steering Group (“JMLSG”) and to the JMLSG Guidance for the UK Financial Sector (“the JMLSG Guidance”); current JMLSG Guidance was issued in November 2007, having been updated to coincide with the implementation of Money Laundering Regulations 2007 (“MLR”) which took effect on 15th December 2007.
The word ‘customer’ is used throughout this manual in a manner that is to be read interchangeably with the words ‘client’ and ‘counterparty’ as each alternative may be appropriate in the firm’s business. The MLR define a business relationship as being with a customer, regardless of whether a firm would refer to their relationships as being with customers or clients or counterparties.
Throughout the manual, references to the “Money Laundering Reporting Officer” are normally abbreviated in accordance with industry practice to “MLRO”; the term Nominated Officer (with its origins in statute) is, in practice, equivalent to MLRO, the latter being a term nowadays with its origins in the FCA Rulebook. Industry practice has long established the use of the abbreviation MLRO (or its expanded form) for all relevant purposes and the term Nominated Officer does not see regular use other than in official documentation requiring the precision of the correct title.
OVERVIEW OF THE FIRM’S PROCEDURES
Introduction
BRYAN GARNIER is required to have appropriate systems and controls in place to ensure that it is not used to further financial crime. Having sufficient information about the customer and making use of that information underpins all other anti-money laundering procedures and is the most effective weapon against the Firm being used to launder the proceeds of crime.
Description
BRYAN GARNIER is required to allocate to a director or senior manager overall responsibility within the Firm for the establishment and maintenance of effective anti-money laundering systems and controls, using a risk-assessed, proportionate approach. This is a senior management responsibility and is separate and distinct from the responsibilities of the MLRO. Firms designating a senior manager for this purpose rather than a director should ensure that the appointee’s status is consistent with the FCA definition of a senior manager; see the FCA Handbook Glossary. Similarly the definition of senior management should also be respected when obligations are required or recommended to be discharged at a senior management level.
The Firm must then carry out regular assessments of the adequacy of these systems and controls and the recommendation from the JMLSG Guidance is that ongoing updating and formal review and sign-off at senior management level is done at least annually. The assessment is to ensure that the Firm is able to identify, assess, monitor and manage money laundering risk and that these systems and controls are comprehensive and continue to be proportionate to the nature, scale and complexity of the Firm’s activities.
BRYAN GARNIER is required to appoint a Nominated Officer/Money Laundering Reporting Officer (the MLRO) who must be based in the UK. The MLRO is the focal point in BRYAN GARNIER for all day-to-day matters relating to anti-money laundering. The MLRO position is an FCA Approved Person (CF11) position and, as such, the procedures for the appointment, temporary replacement and cessation of appointment will follow from BRYAN GARNIER’s procedures for all Approved Persons. The MLRO is required to have sufficient seniority within BRYAN GARNIER and have sufficient resources, including sufficient time and (if necessary) support staff. The MLRO may delegate to deputies or support staff but will remain accountable for oversight of all responsibilities under statute and the relevant FCA Rules. The Proceeds of Crime Act 2002 requires that all reports of knowledge or suspicious activity must be reported to the MLRO (as Nominated Officer) who will then investigate and pass on formal reports to the Serious Organised Crime Agency as judged appropriate.
The Firm is required to allow the MLRO (or deputy) access to all the “Know Your Customer/Client/Counterparty” (“KYC”) information that the firm has in its possession. This is the information relating to the financial circumstances and expected business patterns of the customer and the features of the transactions the Firm has entered into with or for the customer.
All management and staff are required to be aware of BRYAN GARNIER’s anti-money laundering procedures and to have sufficient training. Management and staff, for anti-money laundering purposes, includes all directors/partners, senior managers and employees of BRYAN GARNIER, agency and other third party staff to the extent they are working on BRYAN GARNIER’s business in a way that potentially exposes them to the risk of knowing or suspecting that money laundering is taking place.
Processes and Procedures
MLRO is a managing partner within the firm. The MLRO is accountable to the firm’s governing body and is required to refer to the firm’s governing body if there is a lack of resources for that position and the firm’s Risk Map includes a review of the resources available to the MLRO. The Statement of Roles and Responsibilities for the MLRO confirms that the MLRO has access to all the “Know Your Client” (“KYC”) information held by the BRYAN GARNIER.
MLRO, is responsible for preparing/overseeing the preparation of a training programme for all management and staff when they join the firm and at regular intervals thereafter. Details of this are set out in the staff training section of this Manual.
Record Keeping Requirements
The Compliance Officer maintains records of the appointment of the senior manager accountable for anti-money laundering systems and controls, the Anti-Money Laundering Systems and Controls Officer and MLRO and these records are kept for at least five years following the termination of an appointment.
THE ANTI-MONEY LAUNDERING SYSTEMS AND CONTROLS OFFICER
Introduction
The Anti-Money Laundering Systems and Controls Officer is the director or senior manager with overall responsibility within BRYAN GARNIER for the establishment and maintenance of effective anti-money laundering systems and controls using a risk-assessed, proportionate approach.
Description
The key responsibilities of the firm’s Anti-Money Laundering Systems and Controls Officer are to ensure that:
the firm can identify, assess, document, monitor and manage money laundering risk
its anti-money laundering systems and controls are comprehensive and proportionate to the nature, scale and complexity of its activities
there is regular assessment of the adequacy of the firm’s anti-money laundering systems and controls
 
In identifying its money laundering risk and in establishing its anti-money laundering systems and controls, the range of factors considered will include (but not necessarily be limited to):
the firm’s customers
the firm’s products and services
the firm’s distribution channels
geographic risk
the complexity and volume of the firm’s transactions
the firm’s processes and systems
the firm’s operating environment
 
The scope of the firm’s systems and controls will include:
appropriate training for management and staff in relation to money laundering; appropriate provision of information to the governing body and senior management, including a report at least annually by the MLRO to the firm’s governing body on the operation and effectiveness of those systems and controls; appropriate documentation of the firm’s risk management policies and risk profile in relation to money laundering, including documentation of the firm’s application of those policies; and appropriate measures to ensure that money laundering risk is taken into account in its day-to-day operation; these will include the development of new products, the taking-on of new customers and changes in the firm’s business profile.
Processes and Procedures.
Assessing the money laundering risk
The MLRO prepares a report to the governing board which assesses the money laundering risk faced by the firm. This assessment, the Money Laundering Risk Assessment, is updated each time there is a material change in each factor and is reviewed annually. Each update and review is circulated to the governing body for approval and is included in the MLRO’s annual report to the governing body. Included within this assessment is a review of the type and extent of anti-money laundering training to be given to the firm’s management and staff. More detail on the preparation of the Money Laundering Risk Assessment is set out in the “Assessing the Risk” section of this Financial Crime manual.
Systems and Controls to Counter Money Laundering
Based on the finding of the Money Laundering Risk Assessment the firm’s Risk Map is updated and the appropriate systems and controls put in place. These systems and controls are documented in the firm’s Operating Procedures Manual and tested as part of the firm’s overall Compliance Monitoring Programme. The systems and controls are set to reflect the overall Industry Guidance issued by the JMLSG and the sector specific Industry Guidance issued by the JMLSG and available from the JMLSG website.
Reporting
Reporting to the governing body on the effectiveness of the firm’s money laundering systems and controls is carried out as part of the reporting to the governing body on the results of the firm’s risk monitoring and in the MLRO’s annual report to the firm’s governing body.
THE MONEY LAUNDERING REPORTING OFFICER
Introduction
The MLRO is the focal point in BRYAN GARNIER for all day-to-day matters relating to money laundering.
The MLRO’s responsibilities include:
demonstrable oversight of the Firm’s compliance with the FCA’s Rules on systems and controls against money laundering;
monitoring the effectiveness of the Firm’s anti-money laundering systems and controls;
responding promptly to any reasonable request for information made by the FCA and law enforcement; and
overseeing/establishing and maintaining a training programme for all relevant members of management and staff (including all senior management) appropriate to the financial crime risk posed to the Firm. More detail on training requirements is found in the Purpose of AML Training document.
Obtaining and using international findings including but not limited to those concerning countries with inadequate money laundering regulations.
Providing management with a report, at least annually.
 
Processes and Procedures
Systems and Controls
MLRO reviews the Money Laundering Risk Assessment quarterly to assess whether it needs to be updated in the light of any changes to the firm’s activities and the business environment within which it operates. MLRO reviews the Firm’s overall Record of Risk Assessment to ensure that any changes to the firm’s Money Laundering Risk Assessment are properly incorporated.
The MLRO ensures that each month and quarterly (as appropriate) the systems and controls put in place as a result of the Money Laundering Risk Assessment are monitored effectively as part of the firm’s overall Compliance Monitoring Programme. The MLRO reviews these systems and controls in the light of the overall Industry Guidance issued by the JMLSG and the sector specific Industry Guidance issued by the JMLSG and available from the JMLSG website..
Training Programme
The MLRO has set up the following processes and procedures to ensure that all management and staff within the firm are aware of the firm’s commitment to countering financial crime. For staff that operates or supervises the firm’s systems and controls to counter financial crime the training programme is tailored to their responsibilities and is carried out at more frequent intervals. The MLRO will determine, in conjunction with management the nature and frequency of the training required for each member of management and staff. The training programme has been set up following guidance in Part I Chapter 7 of the overall Industry Guidance issued by the JMLSG and available from the JMLSG website.
All members of staff are required to sign and return, within two weeks of joining BRYAN GARNIER, the Money Laundering Prevention Declaration (which can be found in the Staff Manual) to confirm that they have received and understand BRYAN GARNIER's policy and procedures concerning money laundering. The signed form is to be returned to the Compliance Officer.
The MLRO will ensure that appropriate Money Laundering Awareness training is given to each manager and staff member (including senior management) within one month of them joining and at appropriate intervals thereafter. The content and continuing frequency of the training will reflect the risk assessment of the products and services of the Firm and the specific role of the individual. A record of this training will be maintained in each person’s personnel file.
The Money Laundering Awareness training has been designed to ensure that all management and staff members:
know and understand their responsibilities under BRYAN GARNIER’s operating procedures relating to the prevention of money laundering;
know the identity and responsibilities of the MLRO;
know and understand the law relating to money laundering, including the Money Laundering Regulations, the FCA Handbook and the JMLSG Guidance;
know and understand the potential effect on BRYAN GARNIER, its customers and its staff members, of any breach of that law; and
understands the circumstances in which an Internal Suspicious Activity Report should be made to the Nominated Officer (MLRO).
 
International Findings
The MLRO consults the JMLSG website (http://www.jmlsg.org.uk) on a monthly basis to confirm any changes to international findings and general good practice.
MLRO Report to Governing Body
Each year, or more often if required, the MLRO prepares a report to the firm’s governing body; the report follows the MLRO Annual Report Guidance issued by the JMLSG.
Suspicion Reporting
The processes and procedures relating to suspicion reporting are set out in the reporting section of the Financial Crime manual.
ASSESSING THE FIRM’S MONEY LAUNDERING RISK
Introduction
The senior manager designated as responsible for the Firm’s anti-money laundering systems and controls is required to ensure that the Firm’s money laundering risk is documented and that appropriate, proportionate systems and controls are established to combat this risk.
Processes and Procedures
The MLRO prepares regular reports to the governing board which assess the money laundering risk faced by the firm. These assessments, the Money Laundering Risk Assessments, are updated each time there is a material change in each factor and are reviewed at least annually. Each update and review is circulated to the governing body for approval and is included in the MLRO’s annual report to the governing body. Included within this assessment is a review of the type and extent of anti-money laundering training to be given to the firm’s management and staff.
When assessing and documenting the Firm’s money laundering risk the following factors will be taken into account:
the business and operating environment within which the firm operates
the business processes the firm operates
the firm’s customers and the risks presented by each of its customer types
the firm’s products and services
the complexity and volume of the firm’s transactions
the firm’s distribution and delivery channels
geographical risk
 
In addition to assessing the Firm’s money laundering risk , The MLRO will also assess the risk that the Firm does not comply with the specific requirements of the Money Laundering Regulations 2007. Compliance with the JMLSG Guidance will in general ensure compliance with the Regulations. The likely risks to be faced by the firm on this account can be summarised under the following headings:
failing to appoint a Nominated Officer/Money Laundering Reporting Officer and to designate a senior manager as required by FCA Rules;
not identifying all business relationships which require (enhanced) customer due diligence measures to be taken
not carrying out on-going reviews of existing business relationships and ongoing (enhanced) monitoring of business activity undertaken
not retaining customer due diligence records for the minimum five years after the business relationship ceases
inadequate reporting of suspicions customers and/or transactions
ineffective internal communication of polices and procedures for the monitoring and managements of money laundering risk
inadequate risk assessment of the firm’s money laundering risk
not providing regular training to the relevant staff on the law relating to money laundering and terrorist financing and how to recognise and deal with suspicious transactions.
The MLRO requests the input and assistance of all senior line managers to identify the money laundering risks faced by the firm and to design appropriate systems and controls proportionate to the risk in each of the firm’s business areas.
In designing the appropriate systems and controls for the firm, MLRO recognises that no system of checks will detect and prevent all money laundering or terrorist financing. The risk-based approach will, however, serve to balance the cost of implementing the systems and controls (both to the firm and its clients) with a realistic assessment of the threat of the firm being used in connection with money laundering or terrorist financing.
Record Keeping Requirements
BRYAN GARNIER will keep records of its ML risk assessment for at least five years and these records will be both accessible and secure.
SYSTEMS AND CONTROLS
Introduction
All systems and controls to combat financial crime focus on the Customer Due Diligence (“CDD”) obligation which essentially consists of knowing the customer, knowing the customer’s expected business patterns and monitoring the customer’s transactions and activities. Having sufficient KYC information on customers minimises the risk of being used for illicit activities and protects against fraud. It also enables suspicious activity to be recognised.
Prior therefore to entering into any business relationship with a customer, the firm will ensure that it has sufficient information on the customer, i.e. there is evidence on file to confirm that, firstly, the customer has been identified and, secondly, that the nature of the business the customer is expected to undertake, including the expected or predictable pattern of transactions. This will enable the firm to identify suspicious customers and transactions and for these suspicions to be reported to the appropriate authorities.
Processes and Procedures
BRYAN GARNIER has put in place systems and controls to counter the risk of money laundering in the following areas of its business:
new customer take-on
annual customer reviews
product and service development
service providers and business partners
 
The new customer take-on and annual customer reviews are detailed in the Customer and Client Manual.
All proposals for new products and services are required to be reviewed and approved by the Compliance Officer and MLRO before final approval by the firm’s governing body. This procedure is included in the money laundering staff awareness training.
Where service providers and business partners are involved with the firm’s investment business the Compliance Officer and MLRO are required to review and approve the arrangements in place between the firm or its customers and the service provider or business partner. The firm’ governing body will not approve any arrangements with service providers or business partners without the written approval of the Compliance and MLRO where the underlying matter is related to the firm’s investment business.
If the senior manager is not sure whether the involvement of service providers or business partners relates to the firm’s investment business then it is the responsibility of the senior manager to obtain confirmation on this point from the Compliance Officer. This procedure is included in the money laundering staff awareness training.
Record Keeping Requirements
BRYAN GARNIER will keep records of its money laundering systems and controls for at least five years and these records will be both accessible and secure.
MONITORING THE MONEY LAUNDERING RISK
Introduction
The MLRO is required to monitor the effectiveness of the systems and controls, report weaknesses to management and recommend ways in which the weaknesses can be addressed.
Processes and Procedures
In order to monitor the effective of the firm’s systems and controls to counter money laundering the MLRO will need first to review the firm’s Money Laundering Risk Assessment and the systems and controls put in place to reduce the firm’s money laundering risk. Based on the perceived risk and the systems and controls in place the MLRO will then formulate a testing programme to enable an opinion to be reported to management on the effectiveness of the systems and controls. The type and frequency of testing will be set so as to be proportionate to the money laundering risk faced by the firm and will place greater focus on the higher risk activities that could be vulnerable to use by criminals to launder the proceeds of crime. The testing will be included within the BRYAN GARNIER’s Compliance Monitoring Programme as set out in the Compliance Officer Manual.
The MLRO will consider each aspect of the regulatory system including the Money Laundering Regulations and test the firm’s systems and controls. This will include the following specific areas:
the firm’s documented policies, procedures and controls;
the firm’s customer identification procedures;
the awareness of management and staff;
the training provided by the firm to management and staff;
the firm’s records appropriate to the requirements of the regulations; and
the firm’s suspicion reporting regime.
 
Each test will be fully documented to enable review by the auditors, the FCA and law enforcement agencies. The MLRO will provide reports to management following each review, particularly highlighting any areas of concern. These will be discussed with management and actions and a timetable for implementation agreed.
The MLRO will follow up at later date to confirm that management has taken the agreed action.
Record Keeping Requirements
BRYAN GARNIER will keep records of its money laundering systems and controls monitoring for at least five years and these records will be both accessible and secure.
SUSPICION REPORTING
Introduction
In an FCA regulated firm every member of staff has a statutory obligation under criminal law to report any knowledge or suspicion they have of actual or potential money laundering to the Money Laundering Reporting Officer in his capacity as Nominated Officer. In turn the MLRO has a statutory obligation to investigate and assess each suspicion reported and report all appropriate suspicions to the Serious and Organised Crime Agency (“SOCA”).
The MLRO Guidance on reporting to SOCA is set out on the SOCA website. Reporting should normally be via their on-line system (SOCA Online at https://www.ukciu.gov.uk/(c5z4xzf0s1mwwbrl0ysnacvo)/saronline.aspx).
Description
Internal Reporting of Suspicions
Every member of staff has a statutory obligation under criminal law to report, as soon as is practicable, when they have knowledge or suspicion of money laundering or when there are reasonable grounds to know or suspect that this is the case and when the information is gained within the course of their regulated business activity. All such suspicions must be reported to the Nominated Officer who is also the MLRO.
A money laundering suspicion is one where a person:
knows or suspect, or
when there are reasonable grounds by which they should know or suspect,
 
that the customer or the person on whose behalf the customer is (or appears to be) acting is engaged in money laundering. The requirement to report also applies to situations where the business or transaction has been turned away, or has not been proceeded with because the circumstances were suspicious.
The obligation to report also applies to suspected criminal activity abroad when the knowledge or suspicion arises in the course of conducting business in a UK regulated firm and where the suspected offence would be an offence if it were committed in the UK.
Having reported the suspicion to the Nominated Officer (MLRO) the member of staff fulfils their legal obligation and the obligation passes to the Nominated Officer (MLRO) to deal with the suspicion report in the manner required by law.
Where a member of staff has a suspicion of money laundering, this knowledge/suspicion must not be passed on to the person or entity that is the subject of the suspicion. There are criminal sanctions against staff who tip-off and therefore the procedures for dealing with suspicions must be strictly followed.
Dealing with Internal Suspicious Activity Reports
The Proceeds of Crime Act 2002 specifies that the role of the Nominated Officer (MLRO) is to receive reports of information considered by employees to be cause for suspicion; to validate the information by reference to all other relevant information and then decide whether or not to report, as a disclosure, to the Serious Organised Crime Agency.
When there is a suspicion of money laundering and an instruction is received from a customer to carry out a transaction or other activity, the Nominated Officer (MLRO) may seek consent from SOCA to proceed with the transaction or activity. It would be an offence for the Nominated Officer (MLRO) to give consent to the transaction or other activity prior to receiving this consent via SOCA.
Processes and Procedures
Staff reporting of Suspicions
If any member of staff has either a suspicion or knowledge that the firm has a business relationship of any form with a person or entity who is, or may become, involved in money laundering, then that member of staff must report this immediately to the MLRO/Nominated Officer. If a member of staff is unsure whether or not they have a suspicion they should discuss this immediately with the MLRO. At no stage should the member of staff attempt to neither investigate the suspicion themselves nor in any way indicate to the customer that they have a suspicion of money laundering.
The initial report by the staff member is made in writing to the MLRO/Nominated Officer; an Internal Suspicious Activity Report is available for this purpose.
If the member of staff wishes to discuss the suspicion with management prior to making a formal report they may do so, but the member of staff must not, in any circumstances, be prevented from formally completing the report and getting it to the MLRO/Nominated Officer. 
further business can be undertaken for the customer and what may be communicated to them, if anything, concerning the matter. Wording for the acknowledgement is set out in the Confirmation of Receipt of Internal Suspicious Activity Reporting Form. 
Where a member of staff has a suspicion relating to overseas money laundering, which, if it took place in the UK, would be an offence under UK law, then the staff member is still required to report this to the MLRO/Nominated Officer (MLRO). 
If, following the reporting of the suspicion, other events occur, whether of the same nature or different to the previous suspicion, further suspicion reports must be made to the MLRO/Nominated Officer. 
Investigating a Suspicion 
On receipt of a suspicion report, and having acknowledged receipt of the report, the MLRO/Nominated Officer will decide whether to make an immediate disclosure to the Serious Organised Crime Agency or whether to probe the matter further. 
The MLRO/Nominated Officer will investigate the suspicion report internally without alerting the subject of the suspicion report that they are under suspicion. The investigation will include taking reasonable steps to consider all relevant Know Your Customer’s Business information to enable a decision to be made as to whether there are reasonable grounds for the suspicion. The MLRO/Nominated Officer will document the details of the information presented to him, together with any internal enquiries made in relation to the report, and record the conclusion drawn. The investigation will focus on the reason for the specific suspicion being raised, but will normally entail: 
reviewing the customer file to establish if there are sufficient documents to confirm the customer’s identity and Know Your Customer’s Business information 
a review of the nature of the business to establish if there have been any inconsistencies 
discussions with Account Officers and/or management 
 
The investigation will be fully documented and maintained on file by the MLRO/Nominated Officer. The conclusion on each suspicion report will clearly state the reason for the suspicion being reported to SOCA or, (and as importantly) the reason why the suspicion was not reported to SOCA. The decision by the MLRO/Nominated Officer whether to make a report to SOCA will not, in any circumstances, be subject to the consent or approval of any other person within BRYAN GARNIER. The MLRO/Nominated Officer will seek input from anyone appropriate within BRYAN GARNIER to assist in the determination process for reporting to SOCA. 
Where the information available to make a report is very limited there is no obligation to make a report to SOCA. This would be the case where none of the following is known or suspected: 
the identity of the person who is engaged in money laundering 
the whereabouts of any of the laundered property 
that any of the information that is available would assist in identifying that person or the whereabouts of the laundered property 
 
These investigation records and the documentation to support the reporting decision made will be kept by the firm for at least five years from the time the reporting decision is made. 
Reporting to SOCA 
If a decision is made that the suspicion is to be reported to SOCA then the matter will be reported immediately, preferably online, to the Serious Organised Crime Agency at www.soca.gov.uk/financialIntel/disclosure.html, using the SOCA Online Reporting system. 
A report to SOCA (via SOCA Online) may be used to request authority to go ahead with a transaction or piece of business with the customer who is the subject of the suspicion report, where not carrying on with the business could possibly ‘tip off’ the subject. 
SOCA gives immediate acknowledgement of reports delivered using the on-line system. When consent is required to undertake a transaction or piece of business that is in the future, SOCA will pass the report to an appropriate law enforcement investigator for consideration and determination. SOCA will then forward the permission or otherwise for the matter to go ahead/continue.
After a report has been made to SOCA the MLRO/Nominated Officer will respond to requests for more information from the law enforcement agencies and determine whether the requests are merely for additional explanation or whether the a Production Order is required prior to the firm making the additional disclosures required. The MLRO/Nominated Officer may seek guidance on whether a Production Order is required from the firm’s legal advisers. The MLRO/Nominated Officer will be the principal contact for police, HM Revenue & Customs and other law enforcement agencies and will be the central point within the firm for providing advice and guidance to others. 
Record Keeping Requirements 
BRYAN GARNIER will retain details of actions taken in respect of all suspicion reports for five years.

 

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