Outlining the FCA’s priorities relating to Financial Crime and Anti-Money Laundering
The Financial Conduct Authority’s (FCA) 2017-18 Business Plan identifies six cross-sector priorities, of which financial crime and anti-money laundering (AML) is one. Many of the outcomes the FCA seeks to achieve through the use of its supervisory and enforcement powers are largely consistent with its 2016-17 business plan.
As a starting point and to ensure an effective risk-based approach, the FCA would expect firms to regularly review and update financial crime and AML risk assessments to ensure that areas of higher risk and lower risk are identified. The FCA has been keen to stress that it expects firms to apply proportionate levels of resource and controls to areas of higher risk rather than maintain a ‘one-size fits all’ approach. This may involve considering how technology can automate labour-intensive and manual processes, particularly in the areas of customer on-boarding processes, sanctions and transaction monitoring.
Senior Managers Regime
Throughout the Business Plan, the FCA has mentioned the importance on an organisation’s culture, governance and adherence to the Senior Managers Regime (SMR). Consequently, those holding Senior Manager roles (or Controlled Function roles where SMR has yet to take affect) should ensure they receive adequate management information (MI) to exercise an appropriate level of oversight and control over matters relating to financial crime and AML. Firms may wish to align this MI against the new requirement for Financial Crime Data Returns.
The FCA released new whistleblowing rules in 2015. Given the recent attention in this area, firms are well-advised to consider formally reviewing their whistleblowing policies and procedures and consider providing specific firm-wide training in this area.
Consumer protection against fraud and scams
The FCA has re-emphasised the importance of protecting consumers against fraud and scams. Release of pension funds under the pension reforms has attached attention from fraudsters. Firms in the pensions business may wish to critically assess the tools used to undertake due diligence where requests are received from consumers to liberate their pensions and transfer the proceeds to investments offering unusually high returns. Due diligence technology is more widely available than ever before and can provide firms with assistance to provide an appropriate degree of protection to customers.
Lastly, firms should continue to be mindful of the FCA’s stance on de-risking and be conscious of any measures that could be perceived as de-risking and which could be significantly detrimental to consumers. Appropriately recording your rationale for exiting business/relationships, together with ensuring a fair approach and that your risk appetite aligns with your business strategy, will be key.
For further details or questions please contact Rob Cutler, Partner and Head of Financial Services Forensic at KPMG in the UK.
Maintain regulatory confidence and guard against significant fines through improved anti-money laundering programmes.