In its September 2017 regulation round-up, the Financial Conduct Authority (FCA) warns all authorised firms that it is increasing its focus on anti-money laundering issues.
The regulator says in the bulletin that it is carrying out “a new programme which involves annually reviewing the AML and sanctions systems and controls of approximately 100 largely randomly selected firms.”
Some firms are rightly considered to be much lower risk than others when the likelihood of the firm being used to facilitate financial crime is considered. Mortgage, credit and insurance brokers are examples of firms who might be considered lower risk, but they are still required to have appropriate systems and controls to prevent the firm being used for financial crime.
The FCA acknowledges however that the 100 firms it selects will be “from those sectors we supervise that we consider present lower inherent money laundering risk.”
It adds that “the purpose of the programme is to help raise standards, provide us with a better picture of the risks posed by different sectors and give us assurance that our risk assessment is correct.”
Although some firms are classed as low risk by the FCA, no authorised firm can neglect the issue of anti-money laundering.
Everyone who works within financial services needs to understand this topic. All staff must receive training on how to identify suspicious activity and on the procedure to be followed for reporting suspicions. This training should be repeated as often as necessary, such as every 12 months. Records of the training should be retained in a personnel file or similar.
Issues firms and their employees need to understand include:
• What money laundering is
• The key pieces of anti-money laundering legislation
• The stages of the laundering process
• The importance of verifying the identity of all clients
• The importance of ensuring clients are not subject to restrictions under the Financial Sanctions regime
• What might be regarded as suspicious activity
• What staff should do when identifying suspicious activity
• What the possible punishments are for money laundering offences
With the exception of sole traders, all firms are required to appoint a Money Laundering Reporting Officer (MLRO), who should consider whether to inform the National Crime Agency about any suspicious activity that occurs within the firm. The MLRO should be a senior individual who is competent to judge if an activity is suspicious, and must be someone from within the firm, so for example firms cannot nominate an external compliance consultant as the MLRO.
The FSA and FCA have fined companies in the past for failing to have adequate systems & controls in the area of money laundering prevention. These fines have often been imposed even where there is no actual evidence of suspicious transactions having taken place.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.