Financial Crime World

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FCA Set to Enforce Anti-Money Laundering Requirements

In a move to tighten regulations on financial institutions and businesses operating in the regulated sector, the Financial Conduct Authority (FCA) has emphasized its commitment to enforcing anti-money laundering (AML) requirements. According to sources, the FCA will take into account guidance published by the Joint Money Laundering Steering Group (JMLSG) when deciding whether to take enforcement action against a regulated firm.

Self-Regulatory Organizations and Professional Associations

Businesses operating in the regulated sector are subject to AML regulations and monitored by their respective regulators. Each regulator is responsible for ensuring compliance with the regulations and provides guidance to businesses in its sector. In contrast, businesses operating in the non-regulated sector are not under an obligation to implement AML measures, although they may consider it prudent to do so.

Supervisory Authorities

The FCA, HMRC, the Gambling Commission, and 22 other professional bodies act as supervisory authorities under the Proceeds of Crime Act (POCA) and the Money Laundering Regulations. These authorities have the power to take civil or criminal action in relation to breaches of the regulations or their own regulatory rules.

Government Agencies

The UK’s Financial Intelligence Unit (FIU), which sits within the National Crime Agency (NCA), is responsible for analyzing information reported by financial institutions and businesses subject to AML requirements. The FIU provides intelligence to law enforcement agencies and other relevant bodies to help combat money laundering and terrorist financing.

Penalties and Sanctions

The maximum penalty for failure to comply with AML regulations is severe, with corporations and individuals facing fines and imprisonment. In addition, the FCA has the power to impose sanctions on firms that fail to meet its expectations in relation to AML compliance.

Financial Institutions and Designated Businesses

Businesses undertaking activities listed in Schedule 9 of POCA and “relevant persons” under the Regulations are subject to AML requirements. These include:

  • Credit institutions
  • Financial institutions
  • Auditors
  • Insolvency practitioners
  • External accountants
  • Tax advisers
  • Other designated businesses

The regulations impose obligations on these firms to:

  • Conduct risk assessments
  • Implement appropriate policies and procedures
  • Know their customers

FCA Enforcement

The FCA has emphasized its commitment to enforcing AML requirements, with a focus on ensuring that financial institutions and other designated businesses comply with the regulations. The regulator will take into account guidance published by the JMLSG when deciding whether to take enforcement action against a regulated firm.

Conclusion

The FCA’s emphasis on enforcing AML requirements underscores the importance of compliance in preventing money laundering and terrorist financing. Financial institutions and other designated businesses must ensure that they are meeting their obligations under the regulations, as failure to do so can result in severe penalties and sanctions.