The City watchdog has warned retail banks over ongoing failings in systems meant to prevent financial crimes, including money laundering.
Following its recent assessment of the sector’s financial crime systems and control frameworks, the Financial Conduct Authority has written to all retail bank chief executives
Despite observing some examples of effective control, the FCA said it was “disappointed” to have identified “several common weaknesses” at unnamed firms, ranging from governance and oversight to due diligence and suspicious activity reporting.
“In several cases there are persistent failings that have resulted in regulatory intervention, such as requiring firms to appoint a skilled person to carry out a detailed review, business restrictions [and] enforcement action,” it said.
The FCA said that the banks did not need to respond to the letter, which was sent by David Geale, director of retail banking and payments supervision, at the end of May and only recently made public. But action was required, with a deadline of 17 September imposed.
“You and your senior management should carefully consider [the letter’s] contents and take the necessary steps to gain assurance that your firms’ financial crime systems and controls are commensurate with the risk profile of your firm and meet the requirements of the money laundering regulations,” Geale wrote.
“We expect you to complete a gap analysis against each of the common weaknesses we have outlined by 17 September 2021. You should take prompt and reasonable steps to close any gaps identified.”
He concluded: “In future engagement with your firm, we are likely to ask you to demonstrate the stops you have taken. Where we assess firms’ actions…to be inadequate, we will consider appropriate regulatory intervention to manage the financial crime risk posed.”
