Financial Crime World

Financial Crime Trends and Statistics in British Indian Ocean Territory: A Regulatory Overview

Financial Crime Risks Remain High in BIOT

The Financial Conduct Authority (FCA) has published an analysis of financial crime trends and statistics in the British Indian Ocean Territory (BIOT), highlighting key observations and insights for regulated firms. The report aims to provide a comprehensive understanding of money laundering, terrorist financing, and transfer of funds risks in the BIOT.

Key Statistics

  • 89,000 Politically Exposed Persons (PEPs) reported by firms in 2019/20
  • Significant decrease from previous year attributed to changes in guidance on reporting domestic customers as PEPs

Wholesale Financial Markets Firms Drive Correspondent Banking Relationships

Wholesale financial markets firms account for 67% of submissions reporting non-EEA correspondent banking relationships, highlighting the complexity of services provided by this sector. Retail banking firms have reported approximately 390,000 high-risk customers in 2019/20.

Key Statistics

  • Wholesale financial markets firms: 67% of submissions reporting non-EEA correspondent banking relationships
  • Retail banking firms: 390,000 high-risk customers in 2019/20

Suspicious Activity Reports Increase

The number of Suspicious Activity Reports (SARs) reported to the National Crime Agency has increased from 394,048 in 2017/18 to 480,202 in 2019/20, a 22% increase. This highlights the growing concern of money laundering and terrorist financing risks in the BIOT.

Key Statistics

  • SARs: 394,048 (2017/18) → 480,202 (2019/20)
  • 22% increase over two reporting periods

Firms Invest in Automated Sanctions Screening

The number of firms reporting automated sanctions screening has increased year-on-year, with a 16.5% increase over three reporting periods. However, the investment management sector has the highest number of firms that do not use automatic screening.

Key Statistics

  • Firms using automated sanctions screening: 16.5% increase over three reporting periods
  • Investment management sector: highest number of firms without automatic screening

Firms collectively employed approximately 17,000 full-time equivalent staff in financial crime roles in 2019/20, an increase from 15,700 in 2017/18. A total of 761,437 customers were exited during the 2019/20 reporting period.

Key Statistics

  • Financial crime staff: 17,000 FTE (2019/20) → 15,700 (2017/18)
  • Customer exits: 761,437 (2019/20)

Key Takeaways

  • Financial crime remains a significant risk in the BIOT.
  • Wholesale financial markets firms drive correspondent banking relationships.
  • Retail banking firms have reported high-risk customers.
  • Suspicious Activity Reports increase year-on-year.
  • Firms invest in automated sanctions screening, but some sectors lag behind.
  • Financial crime staffing and customer exit trends highlight ongoing risks.

The FCA’s analysis provides a comprehensive understanding of financial crime trends and statistics in the BIOT, highlighting key areas for regulated firms to focus on to mitigate risks.