FCA Warns Retail Banks over Lapses in AML Systems

The United Kingdom’s financial market regulator, the Financial Conduct Authority (FCA), has warned the retail banks operating in the country for their weakness in controlling financial crimes.

David Geale, FCA’s Director of Retail Banking & Payments Supervision, wrote a letter to the retail banking industry chiefs after a regulatory assessment of the retail bank’s financial crimes controlling system in place.

“We are disappointed to continue to identify, across some firms, several common weaknesses,” the letter stated. It pointed out that the areas of concern in the existing systems are governance and oversight, risk assessments, due diligence, transaction monitoring, and suspicious activity reporting.

Banks Have to Close the Lapses

The regulator has now asked the retail banks to complete a ‘gap analysis’ against all lapses in place before September 17 and then take all reasonable measures to strengthen the systems in place.

If the banks failed to follow the guidelines, the regulator is likely to take enforcement steps. It also highlighted that persistent failings on the part of the financial companies had previously resulted in a regulatory intervention like mandating the appointment of a skilled person for a detailed review, business restrictions, and even enforcement steps.

In a statement, Encompass Corporation Chief Executive, Wayne Johnson, said: “Retail banking is a high-risk sector for illicit financial crime activity, particularly in today’s climate, where the increase in both online banking and remote working has made money laundering even harder to detect.”

“The banks, therefore, must work proactively and collaboratively with the FCA and other regulatory bodies to ensure they are onboarding customers, reporting information, and complying accurately with current existing regulations and industry recommendations.”

After the recent warming of the FCA against Binance Markets Limited, several banks have taken steps to cancel their ties with the crypto exchange and even stopped processing transactions towards it.