The Financial Conduct Authority (FCA) published a report in October 2013 on money laundering, bribery and corruption risks in the asset management sector.
The review addressed the adequacy of anti-money laundering (AML) and anti-bribery and corruption (ABC) systems and controls. It did not consider compliance with sanctions regimes or fraud risk management.
Asset management firms will need to act to meet the FCA’s expectations as regulatory scrutiny is likely to continue in the sector.
Overall, the FCA expected the sector’s firms to have done more to ensure their AML and ABC systems and controls are suitable. While AML control practices varied, most firms appear to need to improve their ABC controls.
Although some good practice was observed, the FCA highlighted the following concerns around the management and oversight of risks:
All firms for whom the report is relevant should consider their AML and ABC compliance frameworks following the FCA’s examples of good and bad practice.
Given the relative maturities of the UK AML and ABC regimes, it’s unsurprising the FCA believes asset management firms have more to do regarding ABC controls than AML controls.
You should expect continuing regulatory focus on the asset management sector and management of financial crime risks because:
Money launderers and terrorist financiers are likely to target asset management firms in future. As other parts of financial services strengthen their controls, would-be criminals will seek alternative ways to access the financial system.
As a minimum, all asset managers should have a documented gap analysis comparing their policies and procedures to the FCA’s findings. They should also have an action plan for any areas of poor practice that are identified.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.