FCA issues warning letter to retail banks over Anti-Money Laundering

By Joy Dumasia

Retail banks have been issued a warning by the Financial Conduct Authority (FCA) about continuing weaknesses and failings surrounding their financial crime controls. The letter was penned by David Geale, the Director of Retail Banking & Payments Supervision for the FCA, and sent to banking industry chiefs across the U.K.

It outlined the key issues and weaknesses surrounding retail banks’ financial crime controls. It requested that each firm complete a gap analysis of each identified deficiency and take prompt and reasonable steps to resolve them by September 17 2021.

The letter warned that the regulator is likely to request a demonstration of the steps taken after this date. If deemed inadequate, the FCA may consider appropriate regulatory action to manage the financial crime risk posed.

The standard control weaknesses identified and cited were in the following areas: Governance and Oversight; Risk Assessments; Due Diligence; Transaction Monitoring and Suspicious Activity Reporting (SARS).

It was highlighted that, in several cases, persistent failings have resulted in intervention, such as requiring firms to appoint a skilled person to carry out a detailed review, business restrictions and, in the most severe cases, enforcement action.

Wayne Johnson, CEO of Encompass Corporation, commented: “Retail banking is a high-risk sector for illicit financial crime activity, particularly in today’s climate, where the increase in both online banking and remote working has made money laundering even harder to detect. The banks, therefore, must work proactively and collaboratively with the FCA and other regulatory bodies to ensure they are onboarding customers, reporting information and complying accurately with current existing regulations and industry recommendations.”

Recently, IBS Intelligence reported that The U.K.’s financial services regulator on June 26 ordered Binance to halt any regulated operations – effectively, a ban on Binance Markets, its only UK-regulated entity offering crypto derivatives.