The FCA has published a guide for consumer credit firms that provides high-level guidance on steps that can be taken to reduce financial crime risk. The aim of the guidance is to enhance consumer credit firms’ understanding of the FCA’s expectations and help firms to assess the adequacy of their financial crime systems and controls. The guide sets out examples of good and poor practices for businesses under the Money Laundering Regulations 2007 (MLRs), relevant to consumer credit businesses and guidance to firms on steps that can be taken to reduce financial crime. The guidance covers the following areas:

  • risk assessment;
  • policies and procedures;
  • governance;
  • staff awareness;
  • data security;
  • anti-money laundering;
  • customer due diligence;
  • ongoing monitoring and suspicious activity reporting; and
  • record keeping.

The FCA requires all consumer credit firms to put in place systems and controls to mitigate the risk that they may be used to further financial crime. The FCA looks at measures the firm has taken to monitor, detect and prevent financial crime risk. The FCA’s financial crime rules are set out in SYSC 6.3.

The FCA is also responsible for supervising how some consumer credit firms comply with the MLRs. The MLRs will generally only apply if the firm is entering into regulated credit agreements as a lender. There are additional anti-money laundering rules in the FCA Handbook for these firms, set out in SYSC 6.3.6 to 6.3.10, including the requirements for most consumer credit firms, other than sole practitioners and limited permission firms, to appoint a money laundering reporting officer.

If the firm is only offering fixed sum credit with deferred payments of less than 12 months, then the MLRs will not apply to that part of its business. If the firm is offering cheque cashing, currency exchange or money transmission, then it will be supervised by HM Revenue and Customs for its compliance with the MLRs.

View FCA financial crime guide for consumer credit firms, 21 November 2016