Fighting financial crime, protecting consumers’ needs, and bolstering wholesale markets are the regulator’s key priorities for the year ahead.

By Rob Moulton, Nicola Higgs, Becky Critchley, and Charlotte Collins

On 19 March 2024, the FCA published its Business Plan for 2024/25, setting out its priorities for the year ahead. While the Business Plan now takes on less significance than it did historically given other publications in circulation such as the FCA’s 3-year Strategy and the Regulatory

The consultation sets out four potential models for reform, and also considers reform to sanctions supervision.

By Rob Moulton, Jonathan Ritson-Candler, Thomas F. Lane, and Charlotte Collins

On 30 June 2023, HM Treasury published a consultation on reforms to anti-money laundering (AML) and counter-terrorism financing (CTF) supervision in the UK. HM Treasury is consulting on structural reforms to how AML and CTF requirements on firms are supervised and enforced, but is not consulting on changes to the AML and CTF requirements themselves at this stage. A separate consultation on changes to the Money Laundering Regulations is expected in late 2023.

One of the options HM Treasury has proposed could significantly impact the way in which financial services firms are supervised for AML/CTF purposes, and so firms should read and consider the proposals carefully.

The Future Regulatory Framework and Consumer Duty will be key areas of focus for the coming year.

By Rob Moulton, Nicola Higgs, David Berman, Becky Critchley, and Charlotte Collins

On 5 April 2023, the FCA published its Business Plan for 2023/24. The Business Plan sets out a number of priority areas for the regulator, tied into its three main areas of focus: reducing and preventing serious harm, setting and testing higher standards, and promoting competition and positive change.

The FCA highlights four of these priority areas that will receive additional emphasis over the coming year. These priority areas indicate a strong focus on developing the Future Regulatory Framework, including consulting on Handbook Rules to replace elements of onshored EU legislation as well as progressing the Edinburgh Reforms; and on consumer protection, including effectively implementing the new Consumer Duty.

Monitoring the progress of the Financial Services and Markets Bill and regulatory divergence between the UK and the EU will continue as a key theme in 2023. 

The Financial Services and Markets Bill leaves a significant amount of the essential regulatory detail to be developed later by HM Treasury (through regulations), followed by development of the specific rules by the regulators. Therefore, firms operating in the financial services sector will face legal and regulatory uncertainty as to the UK’s regime

The case provides instructive practical examples of the “reasonable steps” companies can take according to the FCA and a reminder of the FCA’s cultural expectations of CEOs.

By David Berman, Jonathan Ritson-Candler, and Sean Wells

On 16 November 2022, the FCA issued a final notice (Final Notice) to the former CEO of Sonali Bank (UK) Limited (SBUK), Mr Prodhan, for anti-money laundering (AML) failings for a period running from 2012 to 2014 (the Relevant Period).

The Final Notice provides a reminder to firms of the FCA’s expectations in relation to AML compliance; in particular:

  • the role of senior management oversight of the Money Laundering Reporting Officer (MLRO);
  • the individual accountability of the senior manager tasked with overseeing the firm’s AML and financial crime compliance; and
  • the importance of senior management engendering a strong compliance culture, including in relation to AML.

This annual publication outlines some of the primary focus areas in 2022 for UK-regulated financial services firms. There has been a marked shift away from dealing with immediate post-Brexit priorities to more fundamental consideration of the direction of travel of UK financial services regulation, and this is borne out across many of the topics covered in this year’s publication.

While monitoring regulatory divergence between the UK and the EU will be a key theme for 2022, other familiar topics will

Recent publications come in light of UK’s “greater autonomy” in setting AML and CTF regulations following Brexit.

By Jon Holland, Rob Moulton, and Jonathan Ritson-Candler

Background to the review

On 22 July 2021, HM Treasury published both a Call for Evidence on a review of the UK’s anti-money laundering (AML) and counter-terrorist financing (CTF) regulatory and supervisory regime and a Consultation Paper on amendments, to be made via statutory instrument in Spring 2022 (the SI), to the UK’s key piece of AML and CTF legislation, the Money Laundering Regulations 2017, as amended (MLRs 2017). Despite both papers being published concurrently, they are “separate documents with distinct purposes”. The planned amendments to the MLRs 2017 by virtue of the SI are either “time-sensitive” or “relatively minor” and were proposals for change that were already in development. The SI will, therefore, be unaffected by the findings of the Call for Evidence and any amendments to the MLRs 2017 resulting from the Call for Evidence will be made separately.

UK government encourages regulated firms to share customer information within corporate groups, highlighting interaction with firms’ obligations under the Proceeds of Crime Act 2002 and GDPR.

By Rob Moulton, Jonathan Ritson-Candler, Fiona Maclean, and Olga Phillips

The UK government has published a statement endorsing the Financial Action Task Force’s (FATF’s) recommendations that regulated financial institutions should be required to implement group-wide anti-money laundering (AML) and counter-terrorist financing (CTF) programmes that provide a framework for information to be shared within the group for AML and CTF purposes. The statement agrees with the FATF’s position that cross-border information sharing:

  • By the private sector is a key component of a well-functioning AML and CTF regime
  • On a group-wide basis is a useful tool to prevent, recognise, investigate, and ultimately report specific cases of money laundering or terrorist financing
  • Enables firms to perform effective global risk assessments of customer relationships and avoids information being “siloed” within a particular group entity
  • Ensures firms are better able to perform customer due diligence, identify suspicious activity more readily, and file higher quality Suspicious Activity Reports (SARs) that take account of all of a customer’s transactions with group members

FATF has published its highly anticipated report on the effectiveness of the UK’s anti-money laundering and counter-terrorist financing measures.

By Jon Holland, Rob Moulton, and Jonathan Ritson-Candler

On 7 December 2018, the Financial Action Task Force (FATF) published its highly anticipated mutual evaluation report of the UK. The report sets out the UK’s global standing in combatting money laundering and terrorist financing. The report is generally positive, ranking the UK as either highly or substantially effective in its fight against money laundering and terrorist financing in the majority of areas. The report does, however, highlight some concerns about the UK’s approach, particularly in relation to the Suspicious Activity Reporting (SAR) regime, the utilisation of financial intelligence, and the FCA’s role in the supervision of firms’ compliance with anti-money laundering (AML) and counter-terrorist financing (CTF) rules.

Examples of good and poor practices provide helpful guidance, and a reminder of supervisory expectations.

By Frida Montenius, Jonathan Ritson-Candler, and Charlotte Collins

The FCA has published TR18/3, setting out the findings from its thematic review of the anti-money laundering (AML) and counter-terrorist financing (CTF) systems and controls in 13 Electronic Money Institutions (EMIs). Although the review only focused on EMIs, the findings have wider read-across and therefore are of interest to all firms within scope of the Money Laundering Regulations 2017 (MLRs 2017).

Indeed, given the FCA’s current focus on financial crime as a priority area in its supervisory (and enforcement) activities — and the fact that updating policies and procedures to reflect changes brought about by the MLRs 2017 perhaps may have been overlooked by some — now is a good time for firms to reflect on AML and CTF systems and controls and check that they are up to date and meeting expectations.