At the Financial Crime Summit in London, the FCA’s Executive Director Sarah Pritchard spoke about the need for ‘a targeted and outcomes-based approach to tackling financial crime’.
Using the analogy of a small flame in a bakery igniting and potentially turning into the next ‘Great Fire of London’, the FCA are concerned that, if left unchecked, financial crime could damage the economy, businesses, livelihoods and our trust in the financial system.
As a result. the FCA is taking a targeted approach to tackling financial crime so as to act as a firebreak to prevent disaster.
What does this mean in practice?
We would summarise the approach under 3 themes:
1) Responding with rigour
The FCA are taking responsibility for ensuring that they continue to “enforce their regulations with rigour”, where they see harm they will use their regulatory powers to respond.
For example continuing to charge individuals with financial crime offences (23 individuals prosecuted within the last financial year), freezing or restraining assets of individuals under investigation and taking enforcement action against firms where necessary.
2) Making strategic interventions
The FCA will continue to make strategic interventions. For example working with partners across the whole of the UK system (through the UK’s public and private partnerships) and being diligent and assertive to ensure that those firms that are authorised, and have the right systems and controls in place to tackle financial crime at the outset.
This is a reminder for firms that only by following the guidance and expectations that the FCA have set out will lead to successful registration.
3) Using technology to respond smartly
The regulator is embracing innovation and new technology, such as AI and web scanning tools (e.g. for illegal financial promotions), where it supports efforts to stay ahead of the criminals.
For example, the FCA have created a dedicated financial crime function within their Consumer Investments department – an area where they have seen evolving threats of financial crime and fraud- which has focused on targeting “identifying outliers, spotting trends earlier and snuffing out threats before they spread like wildfire”.
What else might your firm want to know?
There is also mention of the numerous ‘unannounced spot visits’ that have taken place over the last 18 months by the regulator, Where the FCA continues to gather evidence and intervene to prevent harm. This serves as a warning that firms should never be complacent on the fact that the ‘firefighting FCA’ can come knocking at any time to check that protective safety measures are in place.
Lastly, as part of a ‘bucket brigade’, the FCA highlights that it is one part of a nationwide approach to tackling and extinguishing financial crime involving public and private entities. They are working with partners to support system-wide improvements. For example, working with Big Tech companies such as Apple, Google, Bing, Meta and other firms, to stop scams and illegal acts appearing on Apps and social media platforms. Effectively, they are looking to block fraud at source and to continue fraud’s downward trend – which has decreased by 10% in the last financial year.
There can be no doubt that a continued commitment of time and effort is required from Compliance Officers and MLROs to follow and apply the FCA’s recommendations. In our opinion, the FCA’s Financial Crime Guide remains the critical handbook to assist firms in this regard. Overall, the FCA’s message is clear - the heat remains on financial crime.
For more detailed insights, you can read the full speech on the FCA website.
From healthchecks to training, policies to secondments we offer a range of anti-financial crime related support to financial services firms. If you would like support with preventing financial crime, get in touch with one of the team or email us on contact@adempi.co.uk.
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