FCA Business Plan reaffirms its commitment to fighting financial crime

October 01, 2019 by Mark Dunn

The recent publication of the Financial Conduct Authority (FCA) business plan sets out the body's strategic programme, key priorities and focus for 2016 and into 2017.  The plan identifies financial crime, anti-money laundering (AML), innovation and technology as some of the key areas the FCA will focus on to meet its operational objectives of consumer protection, competition regulation and market integrity.

The Financial Conduct Authority (FCA) has released its 2016/17 business plan explaining that it will prioritise anti-money laundering (AML) in response to concerns that the unique position of the UK as a global financial centre attracts a disproportionate amount of corrupt activity and financial crime.

Planning for success

In its business plan for the year ahead, the FCA has reaffirmed its commitment to fighting financial crime.  The agency is, however, planning to put more emphasis on helping banks implement changes without resorting to the wholesale 'de-risking' practices of the past.

In the plan, the FCA stated: "The UK financial system is a major global hub which attracts investment and activity from across the world.  However, this can also attract criminals and terrorist organisations seeking to hide the proceeds of crime among the huge volumes of legitimate business."

Tracey McDermott, acting chief executive of the FCA, explained how, "Ensuring effective and proportionate regulation which tackles the problems of the past without inhibiting developments of the future is at the heart of what we do.  Over the next year we will continue to embed this sustainable approach to regulation in everything we do."

Technology to reduce compliance costs

One of the key themes highlighted in the plan is the FCA's aim to help banks combat financial crime by encouraging the use of technology to reduce the cost of compliance, while at the same time ensuring consumers are not unfairly excluded from financial products.

In the past major banks have chosen to withdraw or deny services to parts of or entire communities of customers deemed as 'high risk' to reduce their exposure to the risk of money laundering and other financial crime.  This practice has had a disproportionately negative effect on a variety of sectors, including charities and non-profit organisations, in essence excluding them from the UK and global financial economy.

The FCA said that, "While we do not control this process, we are undertaking work to help address the issue… We will work with Government, firms and others to create a proportionate strategic response."

The FCA also has a key role in ensuring technology used by financial services is resilient to cyber-attacks and other IT downtime issues, and that it safeguards both consumers and the market by building confidence in its effectiveness.

The FCA plans to take action against organisations and individuals who perpetrate scams and other crimes relating to technology, making use of its full arsenal of enforcement tools including civil court action, asset freezes, insolvency action and, in the most severe cases, criminal prosecution.

How the FCA will measure success

The FCA will judge the success of its plans over the medium to long term by measuring improvements in company AML controls; the perception of the UK's AML regime by foreign assessors and authorities; improvement in consumer awareness of the scams that fraudsters employ and by deploying all of its online resources to help consumers avoid fraud.

The authority has reiterated that when it finds a company with faults in its AML compliance procedures, it will use its enforcement powers to send a deterrent message.  Where a firm fails to take action, the FCA says that it may refer cases to law enforcement agencies.

While the FCA has used its powers to fine companies in the past – most notably a £72 million fine imposed on Barclays over poor AML procedures late 2015 – the majority of penalties have been issued by authorities in the United States.

Encouraging whistleblowers

The FCA says that it will use a full range of intelligence to tackle money laundering including information given by whistleblowers, which will encourage more whistleblowing from within the financial sector either directly from companies or the individuals within them.

The authority has highlighted six priorities for the year ahead: pensions, wholesale financial markets, advice, innovation and technology, firms' culture and governance, and treatment of existing customers.  McDermott stressed that "transparency" is crucial for the authority moving forward, and that the FCA business plan will give all stakeholders, from consumers through to large financial institutions, a clear understanding of the focus for the year ahead.

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