Small banks and commercial insurance intermediaries must use “judgment and common sense” to more effectively manage financial crime, a senior FCA official has warned.
Tracey McDermott, the regulator’s director of enforcement and financial crime, said: “Firms must take their responsibility to reduce the risk of financial crime seriously. Significant improvements are still required in that area.” Her comments follow the publication of two thematic reviews, the 23-page How Small Banks Manage Money Laundering and Sanctions Risk, and the 19-page Managing Bribery and Corruption Risk in Commercial Insurance Broking.
The first review, which came after the FCA had visited 21 smaller banks between October 2013 and June 2014 to assess their anti-money laundering and sanctions systems and controls, found continuing weaknesses, such as inadaquate anti-money laundering resources, staff knowledge and awareness.
The second thematic review, based on visits to 10 wholesale insurance intermediaries between October 2013 and June 2014, found significant weaknesses in areas including business-wide risk assessments and management information.
The FCA has released a 16-page guidance consultation, Proposed Guidance on Financial Crime Systems and Controls. Due date for submissions is 6 February 2015.
David Penny, managing director of Somerset-based Invest Southwest, said: “Smaller firms may well be more vulnerable to manipulation by criminals, and it is right for the FCA to draw attention to this. That said, it is a tough nut to crack. There is a real risk that staff will become overloaded with increasingly complex and nuanced obligations.”