SYSC326 - News (2024)

News (2024)

Links to articles and announcements on financial crime.

2024 2023 2022 2021 2020 2019

FCA - Starling Bank fined £29m for financial crime systems and controls failings
02-10-24 - The Financial Conduct Authority (FCA) fined Starling Bank Limited £28,959,426 for financial crime failings. In 2021 the FCA identified serious concerns with the bank's anti-money laundering and sanctions framework. Starling failed to comply with a requirement restricting it from opening new accounts for high-risk customers until this improved. Between September 2021 and November 2023 Starling opened over 54,000 accounts for 49,000 high-risk customers. In January 2023, Starling became aware that its automated screening system had, since 2017, only been screening customers against a fraction of the full list of those subject to financial sanctions. A subsequent internal review identified systemic issues in its financial sanctions framework. Starling has since reported multiple potential breaches of financial sanctions to the relevant authorities.

JMLSG - Revisions to Part II Sector 18 (Wholesale markets)
30-09-24 - The Joint Money Laundering Steering Group (JMLSG) published revisions to Part II Sector 18 (Wholesale markets) of its Guidance. Details of revisions submitted to HM Treasury for Ministerial approval may be accessed under the “Revisions” tab on the JMLSG website. This sectoral guidance considers specific issues over and above the more general guidance set out in Part 1, Chapters 4, 5, and 7, which firms operating in the wholesale markets may want to take into account when considering applying a risk-based approach.

PSR - APP scams reimbursement
25-09-24 - The Payment Systems Regulator (PSR) confirmed the maximum reimbursement limit for victims of Authorised Push Payment (APP) scams starting from 7 October. The PSR board decided that the maximum reimbursement limit for Faster Payments will be £85,000. The Bank of England also decided that the maximum reimbursement for CHAPS will be £85,000. The Bank is committed to reviewing this limit within 12 months.

HMRC - Internal manual - Economic Crime Supervision Handbook
13-08-24 - HM Revenue & Customs (HMRC) updated its internal guidance manual on the Gov.UK website, on how HMRC personnel should undertake their roles within Economic Crime Supervision (ECS). The guidance is aimed at helping to understand the legislation, how HMRC policies work and how they should be applied. It will also explain how to apply the sanctions framework and the powers available under the The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Additionally, it may be used by external customers to understand how sanctions are applied.

OPBAS - Office for Professional Body Anti-Money Laundering Supervision
09-08-24 - The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) updated its guidance on the FCA website, also providing links to individual reports about OPBAS progress in 2019, 2020, 2020/21 and 2022/23. For the 2022/23 reporting period OPBAS findings included: "Most of the Professional Body Supervisors (PBSs) we assessed were either fully or largely effective in active engagement from senior management in the AML supervision. However, there is still scope for some PBSs to improve in this area, with 2 out of 6 we assessed being only partially effective. PBSs did have AML as a standing agenda item at boards, committees or senior management meetings, but some could not demonstrate that the meetings were supported by sufficiently granular AML data or information about sectoral money laundering issues and emerging risks, to enable effective oversight."

FCA - FCA calls on firms to improve treatment of politically exposed persons (PEPs)
18-07-24 - The Financial Conduct Authority (FCA) has told financial firms – including banks, payment firms and lenders – to do more to ensure parliamentarians, senior public servants and their families are not treated unfairly. In GC24/4: Proposed amendments to Guidance on the treatment of politically exposed persons, the FCA propose changes to its 2017 PEP guidance to: (i) reflect the new legal starting point that UK PEPs should be treated as lower risk; (ii) make clear that non-executive board members of civil service departments should not be treated as PEPs solely for that reason; and (iii) give greater flexibility in who can approve or sign off PEP relationships within firms. The guidance is open for consultation until 18 October 2024.

FCA - The treatment of politically exposed persons
18-07-24 - The Financial Conduct Authority (FCA) published details of a review into how effectively firms are following the FCA's PEP Guidance (FG 17/6 The treatment of politically exposed persons for anti-money laundering purposes) - Relevant to all firms providing financial services to PEPs and their relatives and close associates (RCAs). The FCA found most firms had systems and controls designed to implement its PEP Guidance, but all firms assessed needed to make improvements. The regulator also noted: (i) In some cases, an independent skilled person will be appointed for a more detailed review; (ii) All firms should check their policies, procedures and controls are in line with the FCA's PEP Guidance; and (iii) Some changes will be made to its PEP Guidance, including to make sure it reflects recent changes to the Money Laundering Regulations, which became effective from 10 January 2024.

PSR - CP24/10 Consultation on draft guidance on supporting the identification of APP scams and civil disputes
18-07-24 - In 2023 the Payment Systems Regulator (PSR) issued policy statements setting out parameters for the Faster Payments Scheme (FPS) authorised push payment (APP) scams reimbursement requirement. The start date for the reimbursement policy is 7 October 2024. Ahead of go-live the PSR published 'CP24/10 Consultation on draft guidance on supporting the identification of APP scams and civil disputes', to help Payment Service Providers (PSPs) in making this assessment. The PSR will accept feedback on its draft guidance until 8 August, following which it intends to publish final guidance in mid-September 2024.

FCA - Cryptoasset AML / CTF regime: feedback on good and poor quality applications
03-07-24 - The Financial Conduct Authority (FCA) updated its feedback summary on good and poor quality applications made under money laundering regulations. UK cryptoasset businesses should take note of feedback content when preparing an application for registration.

EBA - EU framework to transform how Europe tackles money laundering and terrorist financing
26-06-2024 - A European Banking Authority (EBA) press release welcomes the entry into force of the new EU framework that will transform how Europe tackles money laundering and terrorist financing. Once established, the Anti-money laundering and Countering the financing of terrorism authority (AMLA) will directly supervise the cross-border credit and financial institutions exposed to highest money laundering and terrorist financing (ML/TF) risk. It will also draft AML/CFT standards and guidelines, oversee AML/CFT supervisors, and coordinate Financial Intelligence Units (FIUs). In accordance with Article 103 and 108 of Regulation 2024/1620, the EBA will transfer its AML/CFT mandates, powers and resources to AMLA by the end of 2025.

FCA - Update on review of treatment of Politically Exposed Persons
19-06-2024 - In 2023, the Financial Conduct Authority launched a review of the treatment of domestic Politically Exposed Persons (PEPs) by financial services firms.
The regulator intended to publish the findings from this review in line with the end of June deadline set in the Financial Services and Markets Act 2023. However, the FCA deferred publication until after the UK pre-election period and will publish it in July once Parliament has returned.

UK Finance - Annual Fraud Report 2024
28-05-2024 - UK Finance (representing 300 firms) published its Annual Fraud Report, showing that £1.17 billion was lost to fraud in 2023. The report outlines the changing profile of losses and the continuing efforts of the finance sector to protect consumers. UK Finance publishes both the value of fraud losses and the number of cases, using data sourced from its members which include financial providers, credit, debit and charge card issuers, and card payment acquirers.

The Institute (Report) The Role of the Money Laundering Reporting Officer
26-05-2024 - The Institute released a report titled, "The Role of the Money Laundering Reporting Officer - Responsibilities, Risks, and Rewards." Described as a synthesises of extensive legal and regulatory guidance with industry best practices and expert insights from seasoned practitioners. The report aims to provide a comprehensive understanding of the MLRO’s responsibilities, the challenges they face, and the crucial skills required to perform this role effectively.

OFSI - Financial sanctions enforcement and monetary penalties guidance
02-05-2024 - The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury (HMT), imposes monetary penalties (on behalf of HMT) for breaches of financial sanctions. The OFSI published updated guidance which sets out what the powers are, how OFSI will use them, and a person’s rights if OFSI imposes a monetary penalty on them.

EBA - Collecting information on natural persons through the AML/CFT database (EuReCA)
02-05-24 - The European Banking Authority (EBA) announced that supervisors across the European Union (EU) may report names of natural persons to EuReCA, the EU central database on anti-money laundering (AML) and countering the financing of terrorism (CFT) of the European Banking Authority (EBA); to make supervision more informed, targeted and effective. EuReCA contains information on serious AML/CFT deficiencies in individual financial institutions that have been identified by EU supervisors. It also contains information on the measures taken by supervisors to address those deficiencies.

OFSI - FAQ launch
01-05-24 - The Office of Financial Sanctions Implementation (OFSI) introduced Frequently Asked Questions (FAQs), as additional guidance aimed at providing technical support to industry partners and the public. FAQs are designed to offer accessible responses to commonplace compliance questions.

SYSC326 - Security Award
01-05-24 - The Security Awards 2024 is a prestigious awards programme that recognises and honours the best of the best in the security industry. Organized by Corporate Vision, the awards aim to showcase the achievements, innovations and excellence of security firms, teams, and individuals across the globe. SYSC326 has been named as Financial Crime Advisory & Investigation Company of the Year 2024.

JMLSG - Consultation Part II Sector 18 (Wholesale markets)
29-04-24 - The Joint Money Laundering Steering Group (JMLSG) published details of proposed amendments to Sector 18 (Wholesale markets) in Part II of its Guidance.

FCA - CP24/9: Financial Crime Guide updates
25-04-24 - The Financial Conduct Authority (FCA) initiated a public consultation on its proposed changes to the regulator's Financial Crime Guide (FCG), in relation to sanctions, proliferation financing and transaction monitoring. Proposed amendments also include adding references to cryptoassets and the Consumer Duty, along with consequential changes throughout the Guide. The FCA requests responses to consulation questions be submitted by 27 June 2024.

SFO - Strategy 2024-2029
18-04-24 - The Serious Fraud Office published its Strategy for 2024-2029, which identifies Serious fraud, bribery and corruption remain significant threats to the security and reliability of the UK as a global marketplace of choice. The strategy document provides a [limited] high-level view on some proposed initiatives, which include: (i) Test new prevention methods through a pilot programme, working alongside our partners to cut serious fraud, bribery and corruption off at the source. (ii) 'Strengthen our operations through the deployment of new powers such as the new “failure to prevent fraud” offence'.

Wolfsberg Group - Principles for Auditing for Effectiveness
26-03-24 - The Wolfsberg Group published 'Principles for Auditing for Effectiveness', aligned to the Group's belief that Internal Audit (IA) can assist Financial Institutions (FIs) in the fight against financial crime, by measuring Financial Crime Risk Management (FCRM) outcomes using the Wolfsberg Factors. The paper identifies that IA can leverage Principles [set out in the paper] to complement their existing audit methodology, while retaining their role as an independent review function.

FCA - Business Plan 2024/25
19-03-24 - The Financial Conduct Authority (FCA) published its Business Plan for 2024/25 setting out the focus of its activities for next 12 months, aligned to: (i) reducing and preventing financial crime; (ii) putting consumers’ needs first; and (iii) strengthening the UK’s position in global wholesale markets. From a financial crime perspective, the FCA intends to increase investment in systems to use intelligence and data more effectively within its financial crime work, to target higher risk firms and activities. The regulator will also continue using its powers to disrupt, pursue and sanction those committing and enabling financial crime, with a tool set that includes proactive assessments of anti-money laundering systems and controls for those firms deemed higher risk.

FCA - FIN074 returns – who needs to complete and why
18-03-24 - The Financial Conduct Authority (FCA) published guidance on FIN074 returns, linked to an Economic Crime (Anti-Money Laundering) Levy chargeable to entities regulated for AML purposes. The amount payable will be determined by reference to a firm's size based on UK revenue generated in an accounting year.

FATF - Guidance on Beneficial Ownership and Transparency of Legal Arrangements
11-03-24 - The Financial Action Task Force (FATF) leads global action to tackle money laundering, terrorist and proliferation financing. The FATF researches how money is laundered and terrorism is funded, promotes global standards to mitigate the risks, and assesses whether countries are taking effective action. FATF Recommendations set out a framework of measures which countries should implement in order to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction. Following February 2023 revisions to FATF Recommendation 25 on Beneficial ownership and transparency of legal arrangements, the FATF has updated its risk-based guidance for this Recommendation.

HMT - Improving the effectiveness of the Money Laundering Regulations
11-03-24 - HM Treasury published a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR), which place requirements onto a range of businesses to identify and prevent money laundering and terrorist financing. The consultation covers four core themes: (i) Making customer due diligence more proportionate and effective; (ii) Strengthening system coordination; (iii) Providing clarity on scope of the MLRs; and (iv) Reforming registration requirements for the Trust Registration Service. In parallel, HM Treasury is also running a survey on the cost of compliance with the MLRs, to better understand how regulated businesses comply with the regulations and to assess the impact of future changes to the MLRs. The closing date for responses to be submitted is 9 June 2024.

HMRC - Economic Crime Levy: increased charges for very large entities (Policy Paper)
06-03-24 - HM Revenue & Customs (HMRC) published a tax information and impact note about an increase to the Economic Crime Levy for entities with a UK revenue of more than £1 billion each year. This measure increases the amount charged under the Economic Crime (Anti-Money Laundering) Levy from tax year 2024 to 2025 onwards, impacting entities that are both: (i) regulated for anti-money laundering purposes; and (ii) have UK revenue over £1 billion each year. The amount charged for these entities will increase from £250,000 to £500,000.

FCA - Action needed in response to common control failings identified in anti-money laundering frameworks
05-03-24 - The Financial Conduct Authority (FCA) issued a Dear CEO letter to [Annex I] firms, emphasising the importance of firms having appropriate policies, controls and procedures in place to reduce and prevent money laundering, terrorist financing and proliferation financing (i.e. “Financial Crime”). The letter identifies common weaknesses observed in Annex I firms in the areas of: (a) Business Model – discrepancies between firms’ registered and actual activities, and lack of Financial Crime controls to keep pace with business growth; (b) Risk Assessment – weaknesses in Business Wide Risk Assessments and Customer Risk Assessments; (c) Due Diligence, Ongoing Monitoring and Policies and Procedures – lack of detail in policies creating ambiguity around actions staff should take to comply with obligations under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017; and (d) Governance, Management Information and Training – lack of resources for Financial Crime, inadequate Financial Crime training and absence of a clear audit trail for Financial Crime related decision-making. The FCA expects Annex I firms to complete a gap analysis against the common weaknesses identified, within six months of receipt of the Dear CEO letter.

FCA - Cryptoasset AML / CTF regime: feedback on good and poor quality applications
04-03-24 - The Financial Conduct Authority (FCA) updated its feedback summary on good and poor quality applications made under money laundering regulations. UK cryptoasset businesses should take note of feedback content when preparing an application for registration.

Gov.UK - Economic Crime and Corporate Transparency Act 2023: Factsheets
01-03-24 - UK Government updated the factsheet library which provides details of different measures contained in the Economic Crime and Corporate Transparency Act. Additional factsheets cover: limited partnerships, the impact of corporate transparency reforms on limited liability partnerships, civil sanctions and offences relating to reform of Companies House and limited partnerships, and beneficial ownership.

HMT - Are the UK’s financial sanctions on Russia working?
29-02-24 - In the week following the second anniversary of Russia’s illegal invasion of Ukraine, the Treasury Committee is launching a new inquiry into whether the UK’s programme of economic sanctions is having the desired effect - to hamper Putin’s ability to fund Russia’s armed forces.

FMSB - Transparency Draft of Standard for Client Onboarding: Documentation and Processes
28-02-24 - The Financial Markets Standards Board (FMSB) published a Transparency Draft applicable to firms when onboarding or reviewing client files under the UK requirements for Know Your Customer (KYC) and AML. The Standard aims to improve the client experience, harmonise the documents required from clients, and also codify elements of best practice in the interaction between clients and onboarding firms. The proposal does not impact onboarding firms’ risk assessment of a client, its connected parties, or any of its attributes. Neither is the proposal intended to modify an onboarding firm’s tolerance for whom they ultimately wish or do not wish to take on as a client. The Documentation Requirements are intended only to apply where Simplified or Standard Due Diligence is deemed sufficient.

Gov.UK - Deter, disrupt and demonstrate – UK sanctions strategy
22-02-24 - The UK Government published its first Sanctions Strategy. The strategy addresses how the UK uses sanctions as a foreign and security policy tool. It sets out the cross-government architecture to deliver sanctions, the partnerships developed with the private sector, NGOs, and international partners, and the steps the UK is taking to strengthen sanctions implementation and enforcement.

HMT - Money Laundering Advisory Notice: High Risk Third Countries
26-02-24 - On 23 February 2024, the Financial Action Task Force (FATF) published an update to its lists of jurisdictions identified as having strategic deficiencies in their AML/CTF regimes, of ‘Jurisdictions Under Increased Monitoring’ and ‘High-Risk Jurisdictions subject to a Call for Action’. In response to the FATF statement, HM Treasury advised firms to consider a list of jurisdictions considered High-Risk Third Countries (HRTC), as defined by Regulation 33 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017; which requires the UK regulated sector to apply enhanced customer due diligence in relation to HRTCs.

UK.Gov - Response to Law Commission review of the SARs regime
12-02-24 - A Policy Paper outlines the government’s response to 19 recommendations contained in a Law Commission report. In 2017, the Home Office commissioned the Law Commission to review and provide recommendations on the suspicious activity reports (SARs) regime, and consider whether there is scope for reform. In 2019, the Law Commission published its report, titled ‘Anti-money laundering: the SARs regime’. The Home Office accepts or partially accepts 13 of the 19 recommendations in the report.

OFSI - New reporting requirements for Designated Persons under the Russia Regime
12-02-24 - A blog hosted by the Office of Financial Sanctions Implementation (OFSI) explains: In June 2023, the UK government announced that it would be introducing two new reporting measures, to strengthen transparency of frozen assets in the UK and assist HM Treasury in monitoring compliance with, and detecting evasion of, financial sanctions. These measures came into force in December 2023, through the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations 2023. The blog explains what these new obligations mean in relation to the 'Immobilised Assets reporting measure' and the 'Designated Persons asset reporting measure'.

FCA - Reducing and preventing financial crime
08-02-24 - The Financial Conduct Authority (FCA) provided a progress update and a look-forward on 4 areas of focus in the coming year: (a) Data and technology - including suggested questions for firms' boards to ask; (ii) Collaboration - encouraging participation in data sharing initiatives and exploring the latest advances in data sharing technology to improve collaboration; (c) Consumer awareness - including suggested questions for firms' boards to ask; and (d) Metrics (measuring effectiveness) - Firms should be able to measure their own effectiveness at preventing financial crime through using outcomes and metrics. The FCA encourages firms to consider how their interventions could contribute towards a reduction in overall rates of financial crime.

EBA - New guidelines to extend the scope of ML/TF Risk Factors Guidelines to crypto-asset service providers (CASPs)
16-01-24 - The European Banking Authority (EBA) issued updated Guidelines on money laundering (ML) and terrorist financing (TF) risk factors, which extend to coverage of crypto-asset service providers (CASPs). The new Guidelines highlight ML/TF risk factors and mitigating measures that CASPs across the EU need to consider when implementing the risk-based approach to AML/CFT as part of their business.

UK Gov - Guidance on money laundering reporting obligations in relation to DAML exemption
10-01-24 - The Home Office issued Guidance on money laundering reporting obligations in relation to Defence Against Money Laundering (DAML) exemption provisions introduced by the Economic Crime and Corporate Transparency Act 2023. On 5 January 2023, the threshold amount specified in section 339A of the Proceeds of Crime Act 2002 (POCA) increased from £250 to £1,000 for acts in operation of an account (such as mortgage payments) maintained with a bank or similar firm. This does not apply to other actions such as returning funds when terminating a relationship with a customer.

Legal Privacy Cookies Search