The FCA has issued its Anti-Money Laundering Annual Report 2016/17.

The Annual Report outlines the FCA’s risk-based approach to anti-money laundering (AML) supervision and its AML supervision strategy. In relation to the latter the FCA describes at a high level its Systematic Anti-Money Laundering Programme, regular AML inspections of high risk firms, financial crime risk assurance programme and financial crime data return.

The FCA also sets out findings and outcomes concerning its AML work. Generally, the regulator has found that in firms much day-to-day work designed to tackle money laundering works reasonably well, and that the steps taken to manage risks presented by most standard risk customers are broadly adequate. However, common root causes the FCA saw were weaknesses in governance, and longstanding and significant under-investment in resourcing.  This under-investment may affect key tools in firms’ control frameworks, such as transaction monitoring systems that are kept up to date.

With smaller firms the most important challenges the FCA has seen relate to resourcing, where key individuals may have multiple roles and competing priorities. This can affect their ability to keep up-to-date with screening and transaction monitoring output, particularly where they have third party providers or rely on manual screening. The FCA has also seen backlogs in alerts generated and potential exposure to undisclosed suspicious activity or sanctions breaches because the alerts are not being discounted or escalated in good time.

In relation to policy developments the FCA briefly discusses:

  • the Office for Professional Body AML Supervision (OPBAS);
  • new technologies and effectiveness;
  • de-risking; and
  • improving the UK’s AML regime.

In relation to looking ahead the FCA states:

“Over the coming year, AML and financial crime will continue to be one of our key priorities. We will continue to review our supervision strategy, using the information from our new data return to target our work on the highest risk firms and sectors. We also aim to have OPBAS operating on an initial basis by the end of 2017.”

View Anti-Money Laundering Annual Report 2016/17, 5 July 2017