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Senior Managers and Certification Regime (SM&CR) definition and meaning | AML glossary

What is the Senior Managers and Certification Regime (SM&CR)? Definition and AML compliance meaning.

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Senior Managers and Certification Regime (SM&CR) definition: What it means in AML compliance.

The Senior Managers and Certification Regime (SM&CR) is the Financial Conduct Authority’s (FCA) way of making accountability in financial services personal.

It puts names to responsibilities, making it absolutely clear who is responsible for what inside a regulated firm. That applies to everything from strategic decisions to day-to-day oversight. While it began in banking, SM&CR was expanded in 2019 to cover all solo-regulated firms including investment businesses, wealth managers, brokers, lenders, and fintechs.

So if you’re running a regulated firm or working in a regulated role, this regime likely applies to you. The regime is made up of three parts: Senior Managers, Certification, and Conduct.

Senior Managers are individuals who hold key functions that significantly impact the direction or control of the firm. They must be pre-approved by the FCA and given clearly defined responsibilities. These are documented in a Statement of Responsibilities, a living record that shows exactly what each senior person is accountable for.

The Certification Regime covers those who aren’t senior managers but still hold roles that could significantly affect the firm or its clients. This includes MLROs and others in compliance, risk, and oversight positions. These individuals don’t need FCA approval but must be formally assessed by their firm as fit and proper to do their job – this happens every year and must be taken seriously.

Then there are the Conduct Rules. These apply broadly, from junior staff to board-level execs. They’re basic standards around acting with integrity, being open with regulators, and showing due care. When these rules are breached, firms are expected to investigate and, where required, report it to the FCA. 

Senior Managers and Certification Regime (SM&CR) meaning

“Launched in 2016, the Senior Managers and Certification Regime (SM&CR)  initially applied to banks, building societies, credit unions and PRA-designated investment firms. The SM&CR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.”

FCA.org.uk

Senior Managers and Certification Regime

What does the Senior Managers and Certification Regime (SM&CR) mean for compliance teams?

For anyone responsible for financial crime compliance, SM&CR changes the way accountability works. It forces firms to make responsibilities formal and visible. That means Anti-Money Laundering (AML) obligations can’t be left as shared tasks or handed around informally.

If you’re a MLRO or head of financial crime, this should already be reflected in your Statement of Responsibilities. The firm must be able to demonstrate that your role, your authority, and your reporting lines are properly structured. If that’s not happening, you’ve got a problem – not just with governance, but with operational risk.

This regime also changes how firms should think about staff certification. Being fit and proper isn’t about past experience alone. It’s about ongoing capability, professional judgement, and behaviour. Certification processes need to assess how well people understand their responsibilities – and whether they’re equipped to carry them out in practice.

In the AML space, that includes knowledge of emerging threats, regulatory expectations, and how to respond when something doesn’t look right.

Conduct is another area where this regime hits home. It’s not enough to have a policy that says staff should act with integrity. You need to create a culture where doing the right thing is the standard, not the exception. That includes dealing with red flags properly, speaking up when controls are being sidestepped, and giving AML professionals the space to challenge decisions when needed.

From a practical standpoint, this also gives AML and compliance leads more influence. If you’re assigned responsibility for financial crime, that comes with both liability and weight. You have the authority to question risky decisions – and if others override you, they need to be able to justify that. It’s no longer about consensus or informal influence. It’s about defined accountability.

SM&CR doesn’t make AML work easier – but it does make it clearer. It brings structure to how responsibility is assigned, how performance is measured, and how misconduct is addressed.

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