FCA warns firms on common failings they've found in financial crime controls

Attention all Financial Crime teams in firms listed in Annex 1 of the Money Laundering Regulations.

The FCA wrote to CEOs on 5 March 2024 outlining the common Anti-Money Laundering (AML) control failings they have observed in Annex 1 firms and setting out the actions they require you to take.

The common AML failings include:
• Financial Crime teams not being adequately resourced.
• A lack of regular Financial Crime training for employees.
• Steps taken to identify and assess ML, TF and PF risks not being fully documented.
• Customer risk assessments assigned at a customer category rather than individual level.
• CDD policies and procedures lacked sufficient detail or were not kept up to date.

The FCA expects Annex 1 companies to complete a gap analysis of the AML failings within 6 months and take prompt action to close any identified gaps. The FCA is likely to ask to see details of the outcome of this exercise in future engagements with your firm and has said that under its new data-led approach they are increasing their proactive work in this area.

This letter is targeted at Annex 1 firms, but all other FCA regulated firms should also ensure they do not have any of the AML failings.

How we can help

Our Economic Crime Compliance team can help you with all aspects of this exercise. Specifically:

• Under our flexible Resourcing Model, our Economic Crime lawyers and former compliance officers can bolster your Financial Crime team. This can be on a full or part time basis and in-person or virtually.
• Assist with updating your Financial Crime policies and procedures.
• Provide Financial Crime training.

Please reach out to Ben Cooper to discuss the FCA's findings and how we can assist you to take the required actions by September 2024.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.