Anti Money Laundering is a broad term relating to legislation, regulation and even internal procedures and process that protect against money acquired through illegal activity appearing as though it has been acquired via a legitimate source.
An appointed representative (‘AR’) is a person or firm which is able to arrange deals in investments and advise on investments by being authorised under the umbrella of a firm which is directly authorised by the FCA (the “principal”) which is already authorised to arrange deals in investments and advise on investments.
Stands for Appointed Representative, where a person or firm is able to carry out certain regulated activities under the ‘Umbrella’ or oversight of a directly authorised firm (The Principal). ARs need to still comply with the regulatory requirements relating to their activities and must allow their principal firm access to carry out the necessary compliance checks and ongoing monitoring.
Controlled Function. This is an activity or function that an individual must be approved for by the FCA prior to carrying out. Some controlled functions are known as SIF’s , significant influence functions and these apply to those is control of the running of the firm for example a Director will need to be approved as a CF1. Those in a customer function relating to certain activities will need to be approved as CF30
Compliance Monitoring Programme. This is a tool used by authorised firms to ensure a thorough ongoing assessment of whether a firm’s compliance processes and procedures are being implemented and recorded effectively in order to meet FCA requirements. A compliance monitoring plan should be proportionate to the scale and complexity of the business and vary based on the firm’s assessment of their regulatory risks.
The FCA’s Conduct of Business Sourcebook. Its contains a combination of rules and guidance that apply to directly authorised firms and their appointed representatives regarding the way they conduct regulated business.
A list of various activities specified in Part II of The Regulated Activities Order. This includes, but isn’t limited to, the regulated activities of‘arranging (bringing about) deals in investments’,‘making arrangements with a view to transactions in investments’ and ‘managing investments’.
Defined under Section 21 of the Financial Services and Markets Act 2000 (FSMA) it is almost any communication that amounts to an invitation or inducement to engage in investment activity communicated by a person in the course of business. As a rule, it must be approved by an authorised person and must be ’fair, clear and not misleading’.
The public record containing a list of all individuals and firms that are, or have previously been, authorised by the FCA. It lists the key individuals within the firm, the registered address of the firm the activities they are permitted to carry out.
This is a benchmark test used by the FCA to assess whether a person is suitable to be an Approved Person and therefore able to carry out Controlled Functions. Its assessment is based on a range of factors including financial soundness, competence, honesty and integrity.
Firm Reference Number given by the FCA to directly authorised firms and appointed representatives. FRNs can be found on the FCA Register and authorised firms will display this number on their website and promotional material.
Financial Services and Markets Act 2000 which is the primary legislation that establishes a framework for the regulation of the financial services industry in the United Kingdom and gives statutory power to the regulator.
High Net Worth Investor is a category of retail client, given to an individual whose financial circumstances fall within the FCA’s definition of a HNWI. Once certified, such a person can receive certain promotional communications which a firm is normally prohibited from circulating to other types of retail clients.
Internal Capital Adequacy Assessment Process is a summary of all the risks faced by the firm and how the firm mitigates against them. These risks should then be subjected to stress testing and an appropriate level of capital should be identified to cover those risks. It is required for all BIPRU and IFPRU firms.
The Joint Money Laundering Steering Group publish industry specific guidance to assist firms with interpreting and adopting best practice anti-financial crime controls. Whilst this is guidance rather than legal rule, both a court and the FCA would take into consideration adherence with JMLSG guidance when determining if an individual or firm has breached or complied with the Money Laundering Regulations.
The Markets in Financial Instruments Directive is an EU directive concerned with increasing competition and consumer protection in the investment sector. This has recently been updated by MiFID II which is set to come into force in January 2018.
Regulated Activities Order is a piece of secondary legislation deriving from FSMA, it specifies the activities that a firm requires permission to carry out and any exemptions or exclusions that apply to those activities as well as the specified investments those activities refer to.
An activity specified in Part II of the Regulated Activities Order. Prior to commencing one of these activities a firm requires either permission to be granted by the regulator or to be able to make use of an exemption.
In relation to NRRS, these investors are sometimes referred to as an ‘everyday investor’ and are retail investors that have confirmed they will not invest more than 10% of their net assets in unlisted shares or unlisted debt securities in a 12-month period.
This type of investor can be certified by a regulated firm or self-certify and they are considered to have sufficient investing experience and knowledge to understand the risks and nature of an investment opportunity based on their experience and/or professional background.
The FCA’s Supervision Manual which sets out the relationship between the regulator and the authorised firms it supervises. SUP contains a combination of rules and guidance covering a vast range of regulatory areas, including the FCA’s powers in relation to monitoring and supervising firms, as well as undertaking enforcement action, their approach to approved persons and the limitations placed upon appointed representative.
Variation of Permission application. This is where a directly authorised firm’s wishes to modify their Part 4a permission in order to either increase, or decrease, the range of regulated activities they are able to perform.