Compound Growth

© Compound Growth Limited 2012-2017

29 April 2015

FCA Guidance

The FCA have now published the revisions to their Firms Guidance on Financial Crime.  In particular the regulator amended Chapter 2 of the Guidance on Financial Crime Systems & Controls on Management Information, as outlined below, as well as Risk Assessments. The regulator also amended Chapter 3 on Money Lauding & Terrorist Financing.

Chapter 2 Guidance Amendments:

Financial Crime Management Information:

The FCA’s Financial Crime Guide helps clarify the type of management information that should be collated and provided to a firm’s senior management to ensure that any risks related to financial crime that their firms’ might be exposed to is fully understood.

The FCA advises that Management Information should be provided regularly and ad hoc as risk dictates and will help senior management effectively manage risks and adhere to their firm’s risk appetite.

Financial Crime Management Information Examples:

• An overview of the financial crime risks, including information about any emerging risks that the firm is exposed to, along with any changes to the firm’s risk assessment.
• Regulatory and legal developments and if these have any effect on the firm’s approach
• An overview of the effectiveness of the firm’s financial crime systems and controls
• An overview of gifts, entertainment, hospitality, charitable donations and staff expenses including any rejected claims
• Relevant information about individual business relationships such as:

- The number of transaction monitoring alerts

- Details of any true sanctions hits

- Information about suspicious activity reports considered or submitted, where this is relevant; and

- The number and nature of new business relationships, in particular those that are high risk and the number and nature of business relationships that were terminated due to financial crime concerns.

Management Information may come from more than one source such as a firm’s compliance department, internal audit, customer-facing staff, the MLRO or nominated officer.

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 Systems

& Controls: Management Information