On 25 April 2024, the Financial Conduct Authority (FCA) published Consultation Paper CP24/9 on proposed changes to its Financial Crime Guide (the Guide).

The proposed updates relate to sanctions, proliferation financing and transaction monitoring. In addition, the FCA is proposing to add references to cryptoassets and the Consumer Duty, along with consequential changes throughout the Guide. The FCA’s aims in making these changes are to help firms understand its expectations, to help firms assess the adequacy of their financial crime systems and controls, and to remedy deficiencies. The Guide contains self-evaluation questions and examples of good and poor practice for firms drawn from FCA work and other financial crime publications.

Proposed changes

The changes proposed in CP24/9 include:

  • Sanctions: The FCA proposes to update this section of the Guide to reflect what it and firms have learned from the extensive assessments carried out of firms’ sanctions systems and controls following Russia’s invasion of Ukraine in 2022.
  • Proliferation financing (PF): Updates are being made to ensure PF is explicitly referenced throughout the Guide where appropriate, and to highlight a 2022 update to the Money Laundering Regulations (MLRs) which requires firms to carry out PF Risk Assessments.
  • Transaction monitoring: The FCA is proposing to set out some key guidance for firms on how they can implement and monitor transaction monitoring systems and support responsible innovation and new approaches, such as use of Artificial Intelligence.
  • Cryptoassets: The FCA proposes to expressly state that cryptoasset businesses registered under the MLRs should consult the Guide, after they became subject to FCA supervision for anti-money laundering purposes in June 2020.
  • Consumer Duty: The updated Guide would make clear that firms should consider whether their systems and controls are proportionate and consistent with their obligations under the Consumer Duty.
  • Consequential changes: The FCA is also looking to make consequential changes to the Guide, including replacing expired links, outdated references to EU rules and refreshed case studies drawing from more recent FCA enforcement notices.

The proposals are relevant to all FCA financial crime supervised firms, and firms that are supervised by the FCA under the MLRs (including cryptoasset businesses).

Next steps

The FCA highlights that the Guide does not contain rules and imposes no new requirements on firms. However, it expects firms to have read and considered the guidance, and to use their judgement on how it may help them ensure they have effective financial crime systems and controls in place.

The deadline for responses to CP24/9 is 27 June 2024.