The purpose of the guidance is to update the Lloyd’s market on the new regulations in conjunction with the existing legal and regulatory framework, clarify its impact on the market and advise on best practice guidance.
In essence, the key guidance points are: the scope of legislation, offences under the Proceeds of Crime Act (PoCA) and Terrorism Act (TACT) 2000, the risk-based approach and customer due diligence, and lastly compliance requirements and procedures.
Under the scope of legislation, guidance is given in respect of which parts of general insurance, and in particular the market, falls within the non-regulated and regulated sectors, and the differing obligations. In respect of PoCA and TACT offences, this area covers the various offences under each act, penalties, and disclosures to the Serious Organised Crime Agency (SOCA), together with the role that Lloyd’s plays centrally.
The area incorporating the risk-based approach and customer due diligence encompasses the requirements for the regulated sector and for those in the Lloyd’s market falling within this sector, and recommendations that these requirements should be seen as best practice for the non-regulated sector of the market. As part of this aspect, the concept of a risk-based approach towards customer due diligence is assessed in relation to the requirements of enhanced and simplified due diligence. Finally, the guidance considers compliance requirements and procedures, incorporating inter alia FSA SYSC1 rules, JMLSG2 Guidance 2007, training and record-keeping.
The guidance also makes reference to the fact that Lloyd’s centrally recognises that further assistance is required in relation to the risk-based approach, and with this in mind, confirms that International Regulatory Risk and Operational Risk teams will be conducting a review of all managing agents’ AML /CTF /financial crime procedures so that an analysis can be drawn up and shared with the market, which it is hoped will include practical examples of factors to consider for a risk-based approach. It is anticipated that this will be issued in the last quarter of 2008.
1Senior Management Arrangements Systems & Controls
2 Joint Money Laundering Steering Group
