Financial Crime Prevention

Introduction

PRA and FCA authorised firms must have appropriate systems and controls to ‘identify, assess, monitor and manage’ the firm’s financial crime risk i.e. the risk that a firm is used to further financial crime.

Prevention of financial crime does not just impact on authorised firms. It also impacts on professional (exempt) firms, solicitors, money service businesses and company and trust providers. Certain firms have to be registered for anti money laundering requirements with HM Revenue and Customs as the ‘regulator’ for financial crime prevention rather than the FCA.

In practice, the impact on any firms who are covered by UK financial crime legislation is generally the same. Requirements arise from the UK Money Laundering Regulations 2007 which implemented the 3rd EU Money Laundering Directive. But financial crime prevention is also a global issue. There is also other associated financial crime UK legislation that impacts on firms including the Proceeds of Crimes Act 2002. Many aspects of financial crime legislation can lead to criminal sanctions either against individuals or firms – even for persons who do not carry out financial crime itself - because they have not complied with their obligations.

UK industry guidance on how to comply with the myriad of legislation is produced by the Joint Money Laundering Steering Group (‘JMLSG’). All firms are encouraged to take this guidance into account when considering what they must do to comply with UK, EU and global requirements.

This includes, but is not limited to:

  • having documented financial crime procedures
  • ensuring there is senior management responsibility for anti money laundering requirements
  • assessing at least annually the firm’s financial crime risks, and risks in relation to new business developments
  • having a financial crime ‘policy’
  • carrying out client due diligence on new clients and ensuring that there is ongoing client due diligence for existing clients
  • ensuring that all staff receive regular training on anti money laundering requirements and making sure staff are aware of their personal obligations including reporting suspicious events to a nominated individual within the firm

Even if a firm is not involved in or subject to financial crime activity, firms can be disciplined for not having appropriate financial crime systems and controls including not carrying out client due diligence. Criminal sanctions can be taken against firms who do not provide regular financial crime training to staff.

How can Gem Compliance Consulting help?

We can help firms in a number of different ways. This includes:

  • documenting appropriate systems and controls for firms newly impacted by the requirements
  • providing guidance on Money Laundering Reporting Officer (‘MLRO’) responsibilities and obligations including internal and external reporting
  • carrying out a healthcheck on existing procedures and arrangements of those firms already covered to ensure that these comply
  • monitoring compliance with existing systems and controls in practice including reviewing client due diligence records
  • providing high level awareness briefing sessions to new senior management in relation to financial crime legislation and their obligations
  • providing detailed training to all staff impacted by the legislation

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