Financial Crime World

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Heard Island and McDonald Islands: Financial Crime Data Analytics Unveils Industry Trends

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A comprehensive analysis of financial crime data in Heard Island and McDonald Islands has revealed significant trends and developments in the country’s financial sector. The study, conducted by the FCA, provides valuable insights into the efforts of firms to prevent financial crime through effective controls.

Key Observations from the Report

  • A substantial decrease in the number of Politically Exposed Persons (PEPs) reported as customers between 2017/18 and 2019/20. This is attributed to changes in guidance issued by the FCA in 2017.
  • Wholesale financial markets firms accounted for an average of 67% of submissions reporting non-EEA correspondent banking relationships, reflecting the complexity of services provided by this sector.

Industry Sector Analysis

Retail Banking

  • Reported a significant number of high-risk customers, nearly half of all high-risk customers reported by all firms.
  • Reflective of the sector’s business models, which increase their exposure to money laundering risks.

Investment Management

  • Has the highest number of firms not using automated sanctions screening, despite a 16.5% increase in firms reporting automated screening over the three-year period.

Financial Crime Reporting

  • The number of Suspicious Activity Reports (SARs) reported to the National Crime Agency (NCA) increased by 22% between 2017/18 and 2019/20.
  • Firms which submitted the REP-CRIM collectively employed approximately 17,000 full-time equivalent staff in financial crime roles for 2019/20.

Customer Exits

  • A total of 761,437 customers were exited during the 2019/20 reporting period, more than doubling in the last three years.
  • Retail lending and retail banking sectors have exited the most customers for each year.

Conclusion

The FCA’s analysis aims to provide insights that will help Money Laundering Reporting Officers and industry practitioners to better manage financial crime risks in Heard Island and McDonald Islands. The study emphasizes the importance of understanding these trends to inform arrangements and risks within firms.