Financial Crime World

Financial Crime Governance and Risk Assessment

As outlined in the FCA Handbook, Section FCG 2: Financial Crime Systems, effective governance and risk assessment are crucial in combating financial crime within firms. This article highlights key points and takeaways from this section to support firms in maintaining a robust approach.

Governance

The FCA expects senior management to play an active role in ensuring that policies and procedures for combating financial crime are:

  • Appropriate: Tailored to the firm’s specific risks and needs
  • Followed: Implemented consistently across all areas of the business

Senior management must ensure that these policies and procedures are regularly reviewed and updated to reflect changing risk environments.

Training and Staff Awareness

Staff should receive regular training tailored to their role, including:

  • Practical examples: Real-world scenarios highlighting financial crime threats and prevention methods
  • Testing: Opportunities for staff to practice their skills and knowledge in a safe environment

Whistleblowing procedures must be clear, accessible, and respectful of staff confidentiality.

Oversight and Review

A firm’s efforts to combat financial crime should be subject to regular challenge through:

  • Internal audit: Independent reviews of financial crime systems controls
  • Compliance reviews: Regular assessments of the effectiveness of policies and procedures

Decisions on resource allocation for these functions should be risk-based, ensuring that areas of high risk receive greater attention.

Additional Guidance

For further guidance on governance (FCTR) and risk assessment, please refer to other sections within the FCA Handbook.

Key Takeaways

  • Ensure senior management is actively involved in ensuring financial crime policies and procedures are effective.
  • Provide regular training to staff, especially those in customer-facing roles, to equip them with knowledge of financial crime threats and prevention methods.
  • Regularly review and challenge the effectiveness of financial crime systems controls through internal audit and compliance reviews.

By following these guidelines, firms can maintain a robust approach to preventing and detecting financial crime.