The UK’s financial watchdog has written to custodians to admonish them over anti-money laundering (AML) shortcomings.
The Financial Conduct Authority (FCA) contacted custody providers, along with money brokers and financial leasing companies, to highlight common failings found in their latest review.
According to the FCA, there are a number of firms “still not getting the basics right”.
Alternative fund managers concerned over money laundering risks, study shows
Among the common failings identified by the FCA were: discrepancies between firms’ registered and actual activities; financial crime controls which had not kept pace with business growth; a failure to risk assess their own or their customers’ activities properly; and inadequate resourcing and oversight of financial crime issues and requirements.
The regulator has called on the companies’ CEOs to take the “necessary steps” to ensure that their financial crime policies are commensurate with the risk profile of their firm.
This includes conducting a gap analysis against the identified weaknesses within the next six months.
FCA to improve pace and transparency around enforcement cases
Failure to take these steps could lead to regulatory or enforcement action, stated the FCA.
“Poor financial crime controls make it easier for criminals to abuse the financial system and damage the integrity of UK markets,” said Emad Aladhal, director of a team of specialists at the FCA dedicated to reducing and preventing financial crime and fraud.
“We have made fighting financial crime a priority and though we’ve seen progress generally amongst the firms we supervise, this report highlights some basic failures amongst Annex 1 firms which are not subject to our full regulatory regime. These must be addressed,” said Aladhal.
