On 23 January 2025, the Financial Conduct Authority (FCA) published updated analysis on money laundering through the markets (MLTM) risk – i.e. the use of capital markets to move criminally generated cash, so it appears legitimately generated.

The FCA focused on wholesale brokers in its review because of their important role in capital markets in facilitating deals, although it also engaged with other market participants to understand wider risks, issues and good practice. The report, which is intended to help firms better understand and mitigate the risk of MLTM, covers:

  • Examples of good and poor practice on enhancing systems, controls and training.
  • Practical case studies.
  • Detailed areas of focus for firms.

The FCA found that good progress had been made since the FCA’s Thematic Review in 2019, including with customer risk assessments, onboarding processes, governance and oversight, and collaboration between trade surveillance and transaction monitoring teams. It saw good practice and progress in several financial crime systems and controls across larger and smaller firms.

However, it also identified areas where firms needed to improve to better protect against money laundering, including:

  • An underestimation of the risks of money laundering firms are exposed to.
  • Over-reliance on others in the transaction chain completing appropriate due diligence checks on customers.
  • Limited information sharing between firms.
  • Insufficient awareness of the MLTM suspicious activity reports glossary code.

Next steps

The FCA flags that:

  • Firms must continue to review their systems, controls, MLTM awareness and training.
  • Public bodies and firms need to work together to evolve and respond effectively to the threat of MLTM.
  • Through its supervisory work, it will ensure that firms are considering MLTM risks and the points raised in the report to drive improvements and reduce risk across the markets.
  • It will also encourage firms and third-party providers to innovate more, to tailor transaction monitoring systems and alerts to capital markets.