FCA puts asset managers on notice: financial crime controls falling short

What's this about?

The FCA has published the findings of a sector-wide review of financial crime controls across 242 asset management and alternative investment firms. While the review highlights examples of good practice, the headline message is clear: the FCA has identified significant weaknesses in core AML controls across the sector, including business-wide risk assessments, customer due diligence, transaction monitoring, governance and oversight of outsourced compliance activities. The FCA has also confirmed that it will use the findings as part of its ongoing supervisory work and will intervene where firms fall short. Firms should therefore view the publication as more than a thematic review; it is a clear indication of the FCA's current supervisory priorities and expectations.

Ben Cooper, Partner in Risk and Financial Crime, says...

"Many of the shortcomings identified by the FCA are not new. They relate to fundamental AML controls that firms have been expected to have in place for years. The significance of this review lies not in the findings themselves, but in the FCA's clear indication that it intends to use them to drive future supervisory activity. Firms should assume that the regulator will expect them to have assessed whether similar weaknesses exist in their own frameworks and, where they do, to have taken steps to address them before the FCA asks the question. This publication feels less like a retrospective review and more like a roadmap for future FCA supervision."

The points not to miss...

So what should firms be doing now?

The FCA has made clear that it will use the findings from this review as part of its ongoing supervisory activity. Firms should therefore assess whether their own financial crime frameworks would withstand regulatory scrutiny and take steps to address any gaps before the FCA identifies them.

In particular, firms should consider:

• Refreshing their business-wide risk assessment to ensure it properly reflects their activities, customer base, distribution channels, geographic exposure and emerging risks.
• Testing whether customer risk assessment methodologies remain fit for purpose, particularly where complex ownership structures, offshore entities, PEPs or higher-risk jurisdictions are involved.
• Reviewing oversight arrangements for outsourced AML activities and ensuring they can evidence meaningful monitoring, challenge and quality assurance.
• Assessing the adequacy of transaction monitoring, periodic review and ongoing screening processes.
• Evaluating whether boards and governance forums receive sufficient management information on financial crime risk and are providing effective oversight and challenge.
• Considering whether AML systems, resourcing and training programmes remain appropriate for the scale and complexity of the business.

The key message from this review is that the FCA no longer views these issues as technical compliance shortcomings. They are governance and risk management failings that may result in supervisory intervention, remediation programmes or enforcement action. Asset managers should use this publication as an opportunity to identify and remediate weaknesses before the FCA identifies them first. Firms that take proactive steps now are likely to be better placed when faced with future supervisory engagement.

How can TLT help?

TLT regularly supports asset managers, wealth managers and alternative investment firms in assessing and enhancing their financial crime frameworks. We help firms respond to regulatory scrutiny, identify and remediate control weaknesses, and deliver practical, risk-based solutions that are proportionate to their business model and risk profile.

Our support includes:

• Independent reviews of business-wide risk assessments, customer risk assessment methodologies and AML governance frameworks.
• Gap analyses and remediation programmes following FCA reviews, thematic findings or supervisory engagement.
• Reviews of outsourced AML operating models, including oversight and governance arrangements.
• Sanctions, AML and financial crime compliance audits and health checks.
• Financial crime training for boards, senior managers, MLROs and compliance teams.
• Support with FCA supervisory engagement, skilled person reviews and enforcement investigations.

With the FCA signalling that financial crime controls remain a supervisory priority, firms should take the opportunity to assess whether their frameworks would withstand regulatory scrutiny and address any weaknesses before they become supervisory issues.

At a glance...

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2026.  For more information see our terms & conditions.