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29 April  2015

FCA Finalises Financial Crime Guidance

In November last year, the FCA consulted on proposed examples of good practice relating to financial crime. Further to this consultation, the regulator has this week published a summary of the feedback and finalised amendments to their Financial Crime Guide.

On Tuesday, (27th April 2015), the FCA published its Finalised Guidance 15/7: Guidance on financial crime systems and controls (FG 15/7).

This Guidance follows Guidance Consultation 14/7: Proposed Guidance on financial crime systems and controls (GC 14/7) in which the FCA proposed to update its guide on tackling financial crime with examples of good practice within the industry with the intention that this would help to illustrate what some firms have done to identify, assess and manage the risk of financial crime.

The examples of good practice followed two thematic reviews that considered small commercial insurance brokers’ anti-bribery and corruption, systems and controls and small banks’ anti-money laundering and financial sanctions.

Each of the respondents to the consultation thought that the regulator’s examples of good practice were useful to help illustrate what some firms have done to assess and manage the risk of financial crime. In addition, respondents also thought that the examples given would help them to approach financial crime compliance in a more proportionate and risk-based manner.

However, some of the respondents were concerned that the examples might be taken as prescriptive and sought further clarification from the regulator. The FCA has now set to provide this in publishing finalised amendments to the Financial Crime Guidance.

In summary, the FCA’s revisions to the financial crime guide include:

• New and revised text boxes on Chapter 2 Financial Crime Systems & Controls and Chapter 3 Money Laundering & Terrorist Financing including details on Management Information (MI), Risk Assessments, Source of Wealth & Source of Funds and Enhanced Due Diligence;
• Revisions to Annex 1 Common Terms; and
• New Chapters (16 & 17) of Part 2 of the Financial Crime Guidance on how small banks should manage money laundering and sanctions risks and on managing bribery and corruption risk in commercial insurance broking.

The new guidance took effect on

27th April 2015.

Further Reading:

• The FCA Financial Crime Guidance Amendments
• Chapter 2 Systems & Controls: Management Information
• Chapter 2 Systems & Controls: Financial Crime Risk Assessments.
• Chapter 3 Money Laundering & Terrorist Financing: Source of Funds & Source of Wealth
• Chapter 3 Money Laundering & Terrorist Financing: Enhanced Due Diligence
• Preventing Financial Crime: Information & Links

Financial Crime Guidance