“Other firms should take notice of today’s fine and look again at their own AML procedures to ensure they do not face similar action.” Mark Steward, Director of Enforcement and Market Oversight, FCA.
In light of the FCA’s decision to issue a record fine of £163m for “failing to maintain an adequate AML control framework”, there’s an immediate requirement for firms to review their AML control frameworks.
The size of the fine; the largest the FCA has ever issued for money-laundering, was influenced by the scale of potential financial crime that occurred and the breadth of deficiencies across the AML control framework. Through mirror trades, customers were able to transfer more than six billion USD from Russian entities through the UK and then on to overseas bank accounts in a typology which could be indicative of financial crime. The fact that this volume of mirror trading occurred undetected, is symptomatic of a number of failings, as identified in the FCA’s Final Notice
Given the specificity of the Final Notice, firms should take stock and assess the effectiveness of AML controls highlighted. Firms must also use this as an opportunity to examine the effectiveness of their AML control framework more broadly:
To inform the development of a robust, prioritised remediation plan, firms should also use this opportunity to reassess their AML risk appetite and strategy. Without regular monitoring and investment, today’s good practice is tomorrow’s mediocre.
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