Joint Money Laundering Steering Group

Definition

The Joint Money Laundering Steering Group (JMLSG) is a UK-based industry body composed of trade associations from across the financial services sector.

It publishes guidance to assist firms in designing and implementing systems and controls to prevent money laundering and terrorist financing under UK law. 

Although the guidance is not legally binding by itself, it carries significant weight because it has the approval of HM Treasury and is recognised by UK regulators.

Explanation

JMLSG’s guidance is structured in three parts: generic guidance applicable across the financial sector, sector-specific guidance for particular industries, and specialist guidance addressing particular risks or product types. 

The guidance sets out good industry practice and interprets obligations under UK legislation (such as the Money Laundering Regulations 2017 and related amendments) in a risk-based manner. 

Key features include:

• Emphasis on senior management responsibility for anti-money laundering (AML) and counter-terrorist financing (CTF) controls.
  
• Risk-based customer due diligence, ongoing monitoring, and internal controls.
  
• Guidance on product, service, and jurisdictional risk, and the need for tailored procedures.
  
• Acknowledgement that the guidance allows firms discretion to apply it proportionately to their size, business model, and risk profile. 
  

JMLSG in AML/CFT Frameworks

Within a UK AML/CFT framework, JMLSG plays a bridging role between statutory/regulatory requirements and practical implementation by regulated firms.
It does this through:

• Providing interpretation of legal obligations and expectations for firms subject to AML/CTF regulation.
  
• Offering practical examples, templates, and typologies of how to structure controls, policies, and procedures.
  
• Acting as a recognised benchmark of “good industry practice” which firms may reference in demonstrating their compliance.
  

Firms that adopt and reflect JMLSG guidance in their AML/CFT frameworks improve their capability to:

• Manage customer risk and product/channel risk in line with regulator expectations.
  
• Document their risk assessments, control frameworks, and governance in an auditable manner.
  
• Respond to changes in regulation, typology, and supervisory focus via updated guidance.
  

Key Components of JMLSG Guidance

Governance and Senior Management

• Senior management must take ownership of the firm’s AML/CTF risk, risk appetite, policies, controls, and resource allocation. 
  
• Appointment of a senior manager or board member responsible for AML/CTF oversight is required.
  
• Appropriate internal audit and compliance functions must evaluate the effectiveness of controls.
  

Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD)

• Firms must adopt a risk-based approach to CDD and apply EDD where higher risk is identified. 
  
• Beneficial ownership, source of wealth, and purpose of business relationships are highlighted.
  
• Monitoring and review of customer relationships must be continuous, not a one-off event.
  

Internal Controls and Monitoring

• Policies and procedures should reflect the firm’s risk profile.
  
• Training for staff in recognising money laundering and terrorist financing risks, and in escalation/reporting obligations.
  
• Verification of third parties, outsourcing, and intra-group arrangements also requires suitable controls.
  

Risk Assessment and Business Risk

• Firms must assess risks posed by customers, products, services, delivery channels, and geographies. 
  
• The risk assessment must be documented, kept up-to-date, and made available to the regulator on request.
  
• The firm’s monitoring, screening, and controls should align with the assessed level of risk.
  

Examples of Guidance Scenarios

• A bank onboarding a non-resident corporate customer conducts additional due diligence because of multiple layers of ownership and connections to high-risk jurisdictions.
  
• A fintech offering digital wallets applies JMLSG-style controls by differentiating onboarding processes for low-value vs high-value customers and uses behavioural monitoring and device fingerprinting in its internal controls.
  
• An insurance company assesses the AML/CTF risk of life insurance beneficiaries and adjusts controls when the beneficiary is a legal arrangement in a high-risk jurisdiction, as per the specialist parts of the guide.
  

Impact on Financial Institutions

By aligning with JMLSG guidance, institutions benefit by:

• Enhancing regulatory credibility and demonstrating adherence to good practice.
  
• Supporting efficient operations by aligning policies and procedures with published industry standards.
  
• Reducing regulatory scrutiny by showing governance and control frameworks reflect expected practice.
  
• Improving the detection and prevention of money-laundering and terrorist-financing activity by deploying structured frameworks that mirror industry guidance.
  

Challenges & Considerations

• The guidance is not legally binding, so firms still require robust internal judgment, documentation, and escalation when applying it.
  
• Sector-specific parts of the guidance must be interpreted carefully for new or emerging business models (e.g., crypto, embedded finance) where explicit examples may not yet exist.
  
• Updating policies and controls in line with revisions to the guidance (for example, consultations or new parts) requires management attention.
• Applying the guidance across multinational groups may involve bridging UK-based guidance with offshore operations and local regulatory regimes.
  

Regulatory Oversight & Governance

• The guidance is developed by the JMLSG body but is subject to ministerial approval via HM Treasury, making it an influential industry standard. 
  
• UK regulators, including the Financial Conduct Authority (FCA), regard adherence to JMLSG guidance as evidence of adopting good practice in AML/CTF systems.
  
• Firms may be assessed by supervisors on how well their controls reflect the guidance and whether deviations are justified and documented.
  
• Internal audit and senior management oversight must ensure the guidance is embedded within policies, training, monitoring, and control frameworks.
  

Importance in AML/CFT Compliance

The JMLSG guidance occupies a central place in UK AML/CFT compliance frameworks because:

• It translates regulatory and legislative obligations into actionable elements, supporting compliance teams and risk functions.
  
• It provides a risk-based, proportionate framework that allows firms of different sizes and business models to tailor their systems appropriately.
  
• It is a benchmark for regulatory and corporate governance expectations, often referenced in supervisory reviews, thematic inspections and internal audits.
  
• It plays a pivotal role in aligning financial crime risk management with evolving typologies, technological change and global regulatory expectations.
  

Related Terms

• Risk-based Approach
  
• Customer Due Diligence (CDD)
  
• Enhanced Due Diligence (EDD)
  
• Internal Controls
  
• Training and Awareness
  
• Business Risk Assessment
  

References

• JMLSG – “Current Guidance” (guidance document download page)
  
• JMLSG – Revised guidance “2020 Revised Version” (Part I PDF)
  
• JMLSG – Revisions page (listing amendments)
  

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