6 Key Changes To The FCA's Financial Crime Guide: Part 2

In Part 1 of this article we looked at 3 key changes arising from the FCA's changes to the Financial Crime Guide (the FCG), covering sanctions, proliferation financing and transaction monitoring. 

In this second and final part, we now turn to the final 3 changes that we think firms should take note of:

4.      Cryptoassets

For the first time, the FCG now explicitly includes cryptoasset firms. As a result, the FCA has aligned the requirements on those firms with the anti-money laundering  (AML) and counter terrorist financing (CTF) standards applying to the rest of the firms it regulates.

The FCG references the ‘travel rule’ for cypto transactions which requires firms to ensure that any crypto transaction that crosses a certain threshold must be accompanied by the personal information of the customer

>> What's the impact?

We expect the impact of this change to be increased due diligence, verification and transparency of personal information as a financial crime deterrent is undoubtedly the driver behind this update.

5.      Consumer Duty

Securing the best outcomes for consumers is not always going to be a task that aligns with ensuring the best anti-financial crime outcomes. The update to the FCG now provides clearer expectations for firms on how to integrate financial crime controls with their Consumer Duty obligations.

Updates include the additional steps that firms may take to help prevent fraud and to support customer journeys.

>> What's the impact?

The Guide now provides tools to refresh or begin thinking about whether extra steps are need to ensure your firm's systems and controls balance good outcomes for customers’ with appropriate measures to protect consumers from the risks posed by financial crime. 

6.      Economic Crime and Corporate Transparency Act 2023 (ECCTA)

The final update that we wanted to highlight is the inclusion of content to support firms in using enhanced information-sharing capabilities to combat financial crime, while also maintaining compliance with data protection regulation

The updated version of the FCG provides greater clarity and comfort to regulated firms to share relevant customer information, either directly or through a third-party intermediary. The content is in line with the requirements brought into force by the ECCTA on 15th January 2024.

It covers enforcement reporting, UK General Data Protection Regulation (GDPR) compliance and also looks at maintaining effective customer complaint processes.

>> What's the impact?

This guidance should help you ensure your firm is adhering to, and is protected by, the ECCTA provisions when sharing and receiving information. Performing a review of related processes to ensure that your firm's controls are effective would be prudent.

Next Steps

Updates to the FCG aim to improve the overall robustness of financial crime controls across the UK financial sector. The FCA has committed to ongoing refinements, including further guidance on fraud prevention, AI, and managing Politically Exposed Persons (PEPS).

Following the update to the FC Guide, it is worth look at the changes made against your firm's business and to assess any gaps in your current framework. The new content can help you to assess the adequacy of your current financial crime systems and controls. It may be useful to do this as part of the firm’s business-wide risk assessment.

How can we help?

Adempi is well-versed in understanding the FCA’s expectations on what good looks like in practice. We assist firms with developing and refining their financial crime risks and control frameworks. Amongst our financial crime consultancy services, we offer healthchecks and audits, as well as advice, practical support and training or eLearning.

Should you require any help then please do not hesitate to contact us.