On 17 May 2023, the FCA published a speech given by Sarah Pritchard (FCA Executive Director of Markets, and Executive Director of International) entitled How to change in response to changing threats.

Among other things the speech asks important questions regarding financial crime controls:

  • If you work on the first line of defence, how often do you review the threats and risks to your customers and the controls you have in place to mitigate against them?
  • Do you ask yourself how your company identifies potential threats to your customers?
  • Is there feedback between your customer call centres where they may be reporting potential scams or fraud?
  • Are you updating and revisiting your controls in light of these changes in threat? Are you raising customers’ awareness to the risks and how they can spot scams? How do they tell a genuine email from your firm versus a phishing email?

Ms Pritchard states that these are important questions to ask – because in doing so, they will ensure that the firm is effective at adapting to changing threats of financial crime. And this is important, because at the heart of this is ‘confidence.’

The speech also touches on sanctions systems. Ms Pritchard explains that the FCA has been using a new synthetic data tool that allows it to directly test firms’ systems for screening names that are on the UK’s Office of Financial Sanctions Implementation (OFSI) consolidated sanctions list. Through its sanctions screening tool work, the FCA has found a few gaps in firms’ sanctions testing. For example, governance and oversight of sanctions systems and controls was not clear or effective in some firms. The FCA also found that some firms were over-reliant on their third-party providers, and are not properly making sure that their systems are tailored to meet business requirements. In some cases, systems were not able to generate alerts against known names on the sanction’s list issued by OFSI.

The FCA’s data tools have been rolled out to many firms over the last year and the regulator will increase its use this year. The FCA has a similar tool to test payments systems in the late stages of development and hopes to roll that widely out shortly.