Banks fined by FCA for failures in anti-money laundering systems and controls

AML (Anti Money Laundering) and Compliance

1. Introduction

The FCA has made it clear that they will continue to demand greater vigilance and enforcement, challenging banks to step up their focus on regulatory compliance.

Early in 2021, The Financial Conduct Authority (FCA), the UK’s regulatory body, published a Dear CEO letter to retail banks, identifying common failings in anti-money laundering (AML) frameworks. Key points included:

  • lack of oversight of controls outsourced to third parties;
  • lack of evidence of senior management approval in certain higher-risk situations;
  • lack of sufficient detail on financial crime risks and/or mitigating controls;
  • improper performance of Customer Due Diligence (CDD) processes, particularly in relation to the purpose and intended nature of the customer relationship;
  • Enhanced Due Diligence (EDD) does not mitigate the customer risks, particularly in relation to Politically Exposed Persons (PEP);
  • lack of understanding of the technical setup of transaction monitoring systems;
  • risk of ‘tipping off’ a suspected money launderer regarding an investigation due to lack of training.

Read the Dear CEO letter here:

2. Latest fines from The Financial Conduct Authority

Anti Money Laundering (AML) is a legislative requirement for most businesses that process financial transactions. It is necessary to register for supervision by an authorised regulator or HMRC. Click here for more information on whether you need to register.

High-value watch and jewellery dealers have been under the requirements for some time, and failure to meet the requirements can result in severe consequences, as this latest investigation shows.

If you are a business that is required to register for AML purposes and you do not, it is a criminal offence. Furthermore, a breach of the Money Laundering regulations carries a possible custodial sentence. It is, therefore, essential that businesses register or secure appropriate advice to be certain about their status.

3. Compliance Solutions

In cases of non-compliance, financial institutions expose themselves to legal, operational, and reputational risks.

Our services allow businesses to focus on their AML and Regulator requirements by implementing effective policies, procedures, training, and consultancy. Having the appropriate policies and processes in place enables your business, its owners, compliance officers, staff, and clients to be protected under the Regulations. Services include, but not limited to:

  • AML Policies and Procedures
  • AML Training
  • Risk Assessments
  • Compliance Auditing
  • Notification and Register Maintenance

AML and Compliance work with regulated businesses and companies to implement compliant structures to run as an undercurrent to their business to flow through the company in a complementary way as opposed to one that is restricted. We do this by providing a structured and detailed overview of the regulations required for a business to comply. We will work with you to apply all the relevant regulations to your business and make the relevant changes.

3.1 Anti-Money Laundering Risk Assessments

A vital part of Anti-Money Laundering (AML) Regulations is for a business to undertake a formal risk assessment. The principal reason is to identify, manage, and eradicate the potential for the business to be caught up in money laundering.

Our anti-money laundering risk assessments provide business owners valuable insight into their working practices. They provide an overview of risk and highlight the issues within the business. The risk assessments provided by AML and Compliance are performed to the most meticulous standards; within this process, we factor in all the considerations that impact the business’s staff, clients, operations, and finances.

A risk assessment must be performed regardless of your business’s size and structure. We work with businesses of all sizes, sectors, and jurisdictions.

What are the main factors to an AML risk assessment?

An effective risk assessment must include:

  • A review of the business’ approach to AML and its policies and procedures.
  • A clear understanding of the operation of the business
  • An understanding of the clients and where potential risks may arise
  • Engagement with staff in order to gather the appropriate information to assess risks and how they are and should be managed
  • Identifying the geographical locations where risk could be enhanced and delivering solutions to reduce such risks
  • A review of the work types and the risks associated with each of them in order to take action and reduce risks where they arise
  • A review of the existing transactions that a business undertakes, identifying the risk and the action to reduce or remove risk from future processes of business
  • A review of the process of money management and finances to ensure that businesses are aware of the potential causes of concern and ensuring that the company is able to take action to remove or reduce the risk.
  • A review of the knowledge obtained by the staff and identifying where enhancement is necessary
  • Considering the application of policies and where they need to be enhanced, ensuring full implementation
  • Considering other areas of risk across a business other than AML-related areas (business external risks and part of a risk assessment is to take this into consideration)

Our Compliance Services

If you are concerned that your current AML policies and procedures are out of date, not robust enough, or you simply want to review your processes and adequately train your staff, please get in contact with our team of experts that have years of experience in this field.

We will work with you to create bespoke and specialist policies that are tailored to your company, and we will help to educate your staff on their obligation.

Call us on 0203 985 8553 or click here for more information about our services.

View and download the PDF of this article here.


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