The FCA issues warning to banks over financial crime and AML failings

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In a recent letter, the Financial Conduct Authority has warned retail banks about continuing weaknesses and failings surrounding their financial crime systems and controls.

In the ‘dear CEO’ letter to banks, published in July, the FCA said they ‘’are disappointed to continue to identify, across some firms, several common weaknesses’’. The findings come as a result of recent assessments of financial crime systems and controls. Despite some examples of effective control frameworks and good practice, the assessment found failings in key areas such as:

  • Governance and Oversight
  • Risk Assessments
  • Due Diligence
  • Transaction Monitoring
  • Suspicious Activity Reporting

Poor financial crime controls in a high-risk sector such as retail banking, can have significant consequences. It can lead to criminals abusing the financial system to launder the proceeds of crime, supporting further criminal activity and damaging the integrity of the UK financial market.

The FCA has requested that each firm complete a gap analysis of each of the identified weaknesses and take prompt and reasonable steps to resolve them by 17th September 2021. The regulator will follow up with firms to assess how they have demonstrated steps they have taken to address their weaknesses. If deemed inadequate, the FCA is likely to take enforcement steps and regulatory action in order to manage the financial crime risk posed.

In its letter to banks, the FCA also highlighted that persistent failings on the part of the financial companies had previously resulted in a regulatory intervention like mandating the appointment of a skilled person for a detailed review, business restrictions and even enforcement steps.

How we can help

With financial crime becoming more sophisticated, a multi-layered approach to financial crime compliance and identity proofing is essential. Based on the variety of unique risks that emerge from individuals, transactions, and contact channels, it is important to assess both the individual and the business (if applicable) with a need for real-time behavioural data/analytics.

Taking this multi-layered approach to identity proofing, our 123signed platform:

  • Investigates both the physical and digital identity attributes
  • Assesses both the individual and the transaction
  • Incorporates both KYC and KYB processes
  • Leverages date analytics to assess risk and behaviours in real-time

To learn more about how 123signed can help your business manage your risk when it comes to onboarding and monitoring your consumers and merchants, contact us here.

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