Fighting Financial Crime

The FSA has published the findings of its review into small firms’ anti-financial crime systems and controls, which covered anti-money laundering and financial sanctions, data security and fraud controls. 159 small Firms were part of the review. The findings indicate that the small firms sector is “generally weak in its assessment and mitigation of financial crime risks”. Just over half of the firms reviewed had used outside compliance consultants to produce policies and procedures.

Exciting stuff - generally speaking IFA's need to pull their socks up. As is often the case, business owners will invariably "tick the box" that they have something written down and then either fail to adapt it to reflect their individual needs or simply ignore the process altogether.

Firms are required to have systems in place to verify that they are not being used to facilitate financial crime.

This will include:

Adequate controls on recruitment - including taking up CRB checks where appropriate

Verification of identity and sources of funds

Provision of training to staff on tackling financial crime

Controls over dealing with politically exposed persons (PEPS)

Ensuring that existing and prospective customers are not on the treasury blacklist.

Having strategies in place to identify and tackle potential fraudulent activity / market abuse.

Appropriate due diligence systems to identify or deal with higher-risk customers or situations.

Clear and effective procedures for managing suspicious transactions including reporting to SOCA.

I expect that this will be another topic on the shopping list for discussion when the FSA next turn up at a small firm near you - How do your controls stack up?

For help and guidance contact me at info@compliantsolutions.co.uk