0–9 A B C D E F H I L M N O P R S T W SMF list

How to Use This Glossary

Each entry gives a short definition and links to the page where we explain the topic properly. Definitions are deliberately brief and general; the regulators’ own rules in the FCA Handbook and the PRA Rulebook are the authoritative source, and the FCA’s SMCR pages explain how the regime applies to each type of firm. For a fuller introduction, start with SMCR explained and our SMF designations guide.

0–9

12-week rule: The rule that lets a firm cover an unexpected Senior Manager vacancy for a limited period without full approval, while it recruits a permanent replacement. See: The 12-week rule.

A

Annual MLRO report: The MLRO’s yearly report to the board on the effectiveness of the firm’s anti-money laundering systems and controls. See: The annual MLRO report.

Anti-money laundering (AML): The systems, controls and checks a firm uses to stop it being used to launder money or finance terrorism, set mainly by the Money Laundering Regulations 2017. See: The Money Laundering Regulations.

Appointed representative (AR): A firm or person that carries on regulated activities under the responsibility of an authorised principal firm, rather than being authorised itself. See: Appointed representatives explained.

Approval: The regulator’s agreement that a person may perform a Senior Manager Function. It must be granted before the person starts the role. See: What goes wrong in Form A submissions.

Authorisation: The FCA or PRA permission a firm needs to carry on regulated activities. The application names the people who will hold the Senior Manager Functions. See: The authorisation journey.

B

Background checks: The checks firms carry out before applying for a Senior Manager’s approval, including criminal records, credit, regulatory references and directorships. See: SMCR background checks.

Board skills matrix: A tool for assessing the board’s collective knowledge and experience against what the firm needs, and identifying gaps. See: Board skills matrix template.

Business-wide risk assessment: The firm’s assessment of the money laundering and terrorist financing risks it faces, required by regulation 18 of the Money Laundering Regulations. See: The business-wide risk assessment.

C

CASS: The FCA’s Client Assets Sourcebook: the rules on how firms protect client money and custody assets. See: CASS explained.

Certification Regime: The part of the SMCR covering staff who aren’t Senior Managers but whose roles could cause significant harm. Firms must certify them as fit and proper each year. See: The Certification Regime explained.

Collective suitability: The PRA’s expectation that a bank or insurer’s board, taken together, has the skills and experience to oversee the firm. See: PRA collective suitability.

Combined SMF16 and SMF17: One person approved as both compliance officer and MLRO, common at smaller firms. See: Combined compliance officer and MLRO recruitment.

Compliance monitoring plan: The compliance officer’s risk-based programme for testing whether the firm complies with the rules in practice. See: The compliance monitoring plan.

Compliance officer: The person accountable for the firm’s compliance function, approved as SMF16 at most firms. See: Compliance officer recruitment.

Conduct Rules: The standards of behaviour that apply to almost everyone in a regulated firm. Senior Managers are subject to four additional Senior Manager Conduct Rules. See: Conduct Rules explained.

Consumer Duty: The FCA’s rules requiring firms to deliver good outcomes for retail customers across products, price and value, understanding and support. See: The Consumer Duty for Senior Managers.

Consumer Duty board champion: A board member, usually a non-executive, who helps the board hold the firm to account on the Consumer Duty. See: The Consumer Duty board champion.

Core firm: The default category of solo-regulated firm under the SMCR, with a standard set of Senior Manager Functions and Prescribed Responsibilities. See: Which SMFs apply at which firm tier.

Customer due diligence (CDD): Identifying and verifying customers and beneficial owners, and understanding the purpose of the relationship, before and during it. See: Customer due diligence and EDD.

D

DAML: A defence against money laundering: consent requested from the National Crime Agency to proceed with a transaction the firm suspects involves criminal property. See: Suspicious activity reports.

Deputy MLRO: A person who supports the MLRO, covers reporting decisions in their absence and is often their successor. See: Do you need a deputy MLRO?.

Dual-regulated firm: A firm regulated by both the PRA and the FCA, such as a bank, building society or insurer. Its Senior Managers need approval from both. See: The PRA and the FCA.

Duty of Responsibility: The duty that lets the regulator take action against a Senior Manager if the firm breaches the rules in their area and they didn’t take reasonable steps to prevent it. See: The Duty of Responsibility.

E

Enhanced due diligence (EDD): Additional checks required for higher-risk customers and situations, such as politically exposed persons and high-risk third countries. See: Customer due diligence and EDD.

Enhanced firm: The largest and most complex solo-regulated firms, which face extra SMCR requirements including a Responsibilities Map and overall responsibility for every activity. See: Becoming an Enhanced firm.

F

Failure to prevent fraud: A corporate offence, in force since September 2025, under which large organisations can be liable if an associated person commits fraud intended to benefit them. See: The failure to prevent fraud offence.

Financial crime: The umbrella term for money laundering, terrorist financing, sanctions breaches, fraud, and bribery and corruption. See: Financial crime leadership recruitment.

Financial promotion: An invitation or inducement to engage in investment activity. Promotions must be fair, clear and not misleading, and approved by an authorised person. See: Financial promotions.

Fit and proper test: The regulators’ assessment of a person’s honesty, integrity and reputation, competence and capability, and financial soundness. See: The fitness and proper test in full.

Form A: The application form a firm submits to seek approval for a person to perform a Senior Manager Function. See: What goes wrong in Form A submissions.

Forms B, C, D and E: The SMCR notification forms for withdrawing an application, a Senior Manager leaving, changes to details and internal transfers. See: Notification forms B, C, D and E.

Fractional Senior Manager: An approved Senior Manager who works part of the week for a firm, often across several smaller firms. See: Fractional and interim SMF cover.

H

Handover: The information an outgoing Senior Manager must pass to their successor so the new holder can take on the role effectively. See: Senior Manager handovers.

Head of financial crime: The manager who leads the financial crime function. At larger firms they often also hold SMF17. See: Head of financial crime or MLRO?.

I

ICARA: The Internal Capital Adequacy and Risk Assessment that investment firms under the IFPR must carry out. See: ICARA and IFPR explained.

IFPR: The Investment Firms Prudential Regime, which sets capital and liquidity requirements for MiFID investment firms. See: ICARA and IFPR explained.

Interim Senior Manager: A Senior Manager appointed for a fixed period, usually to cover a vacancy, a remediation or a period of change. See: Interim MLRO and compliance officer recruitment.

L

Limited Scope firm: The lightest SMCR category, for firms with limited regulated activities, with fewer Senior Manager Functions. See: Which SMFs apply at which firm tier.

M

MLRO: The money laundering reporting officer, accountable for the firm’s anti-money laundering systems and controls and approved as SMF17 at most firms. See: What is an MLRO?.

Money Laundering Regulations (MLRs): The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017, which set the UK’s core anti-money laundering requirements. See: The Money Laundering Regulations 2017.

N

Nominated officer: The person who receives internal suspicion reports and decides whether to report to the National Crime Agency. Usually the MLRO. See: Suspicious activity reports and the nominated officer.

Non-executive director (NED): A board member without executive duties. Some NED roles, such as chair and committee chairs, are Senior Manager Functions. See: Non-executive directors at FCA-regulated firms.

O

Operational resilience: A firm’s ability to prevent, adapt to and recover from disruption to its important business services. See: Operational resilience.

Overall responsibility: At Enhanced firms, every activity, business area and management function must have a Senior Manager with overall responsibility for it. See: SMF18 explained.

P

Politically exposed person (PEP): A person entrusted with a prominent public function, along with their family members and close associates. PEPs require enhanced due diligence. See: Politically exposed persons explained.

Prescribed Responsibilities: Specific responsibilities that the regulators require firms to allocate to a Senior Manager, such as responsibility for the firm’s compliance with the SMCR. See: Prescribed Responsibilities explained.

Prohibition order: An order banning a person from performing some or all regulated functions. See: FCA prohibition orders.

R

Reasonable steps: The standard a Senior Manager is judged against under the Duty of Responsibility: what a competent person in their position would have done. See: The Duty of Responsibility and reasonable steps.

Regulatory reference: A reference covering the past six years that firms must request before appointing Senior Managers and certified staff, and must give when asked. See: Regulatory references: the six-year rule.

Regulatory reporting: The returns a firm submits to the FCA or PRA, such as financial, prudential and conduct data. See: FCA regulatory reporting explained.

Responsibilities Map: A document, required of Enhanced firms, showing how responsibilities are allocated across the firm’s Senior Managers and governance. See: The Responsibilities Map explained.

S

Safeguarding: The rules requiring payment and e-money institutions to protect customer funds so they can be returned if the firm fails. See: Safeguarding for payments and e-money firms.

Sanctions: Financial restrictions imposed on designated persons, entities and countries, administered in the UK by OFSI. See: Sanctions screening and compliance.

Section 166 (skilled person review): A review the FCA or PRA can require, carried out by an independent skilled person, usually when it has concerns about a firm. See: Section 166 skilled person reviews.

Senior Manager: A person approved by the FCA or PRA to perform a Senior Manager Function, and personally accountable for their area. See: Senior Manager Functions explained.

Senior Manager Function (SMF): A role designated by the regulators as carrying the greatest risk of harm, which requires prior approval. Each has a number, such as SMF16. See: SMF designations: a complete guide.

SMCR: The Senior Managers and Certification Regime: the FCA and PRA framework for individual accountability in regulated firms. See: SMCR explained.

SMCR reforms: The changes to the regime proposed by the government, FCA and PRA from 2025 to make it simpler and faster without weakening individual accountability. See: SMCR reforms.

SMCR training: The training firms must give staff on the Conduct Rules that apply to them, and the wider training Senior Managers need to meet their responsibilities. See: SMCR training.

Solo-regulated firm: A firm regulated only by the FCA, not the PRA. Most investment, advice, credit and payments firms are solo-regulated. See: Which SMFs apply at which firm tier.

Statement of Responsibilities: The document setting out what each Senior Manager is responsible for. It is submitted with the approval application and kept up to date. See: Writing a Statement of Responsibilities.

Succession planning: Planning who will take over each Senior Manager role, and how the firm will cover a sudden departure. See: SMF succession planning.

Suspicious activity report (SAR): A report to the National Crime Agency of knowledge or suspicion of money laundering or terrorist financing. See: Suspicious activity reports.

T

Tipping off: The offence of disclosing that a suspicious activity report has been made, or that an investigation is under way, in a way likely to prejudice it. See: Suspicious activity reports.

Transaction monitoring: The ongoing review of customer transactions to detect activity that is unusual or suspicious. See: Transaction monitoring explained.

Travel rule: The requirement for cryptoasset businesses to share originator and beneficiary information with transfers, in force in the UK since September 2023. See: Hiring a crypto MLRO.

W

Whistleblowers’ champion: The Senior Manager, often a non-executive, responsible for overseeing the firm’s whistleblowing arrangements. See: The whistleblowers’ champion.

Senior Manager Functions at a Glance

Every Senior Manager Function we cover, with our guide to the role and the page for recruiting it. For which functions apply to your firm, see which SMFs apply at which firm tier.

Terms We’re Asked About Most

Three questions come up on almost every call we take. First, which designation does this role need? The designations guide and SMF3 or SMF18? answer most of them. Second, can one person hold more than one function? See combining Senior Manager roles and, for the most common combination, combined compliance officer and MLRO recruitment. Third, how long will approval take? Our guide to how long an SMF appointment takes sets out a realistic timetable.

Frequently Asked Questions

What does SMF stand for?

Senior Manager Function: a role the regulators designate as carrying the greatest risk of harm, which needs their approval before the person starts.

What is the difference between SMCR and SMF?

The SMCR is the whole regime. SMFs are the specific Senior Manager roles within it, each with a number such as SMF16 for compliance oversight.

Is this glossary legal advice?

No. It gives general explanations. For your firm’s position, check the regulators’ rules and take advice where needed.

Can you add a term?

Yes. Tell us which term you’d like explained and we’ll add it.