On 5 September 2019, the PRA published a Dear CEO letter on money laundering (ML) and terrorist financing (TF) risks in prudential supervision. In particular, the PRA draws attention to the recently published European Banking Authority (EBA) opinion on this topic (see our previous blog post here).
The PRA fully supports the EBA opinion and will continue to consider ML/TF concerns in its prudential assessment of firms, especially those stemming from anti-money laundering (AML) and counter-terrorist financing (CTF) authorities’ assessments of these risks. The PRA will also continue to consider the extent of which ML/TF concerns may have on the impact of its prudential objectives and act on those concerns. Therefore, it will continue to co-operate closely and share information with the FCA and other AML/CFT authorities concerning individual firms and groups.
In the Dear CEO letter, the PRA reminds firms that:
- they are responsible for ensuring that members of the management body and senior management are, at all times, of sufficiently good repute, and possess sufficient knowledge, skills and experience to perform their duties, in essence, they are ‘fit and proper’;
- in line with rule 2.1 of the PRA’s General Organisation Requirements, they must have robust governance arrangements, including a clear organisational structure with well defined, transparent and consistent lines of responsibility, effective processes to identify, manage, monitor and report the risks it is or might be exposed to, including ML/TF risks, and internal control mechanisms, including sound administrative and accounting procedures and effective control and safeguard arrangements for information processing systems; and
- to maintain the FCA-prescribed senior management responsibility for financial crime is allocated to individuals of sufficient seniority to perform the role effective.
The PRA states that its supervisors will consider the points raised in the EBA opinion and the Dear CEO letter as part of their ongoing supervisory engagement. Firms with queries about the content of the Dear CEO letter should contact their usual PRA supervisory contact.