The Inclusion of Financial crime as an FCA major risk factor

April 16, 2015 2 minute read

On the 24th of March 2015 the FCA released their business plan for the year. A notable aspect of the plan was financial crime replacing house price growth as a top risk consideration. Additionally, the FCA placed a special focus on combating money laundering, bribery and corruption.

Reasons for inclusion

Broadly speaking the FCA’s objective is to promote and enhance the integrity of the UK’s financial system. By including financial crime as a major risk factor the FCA is attempting to:

Improve risk management procedures

The FCA feels that companies are not taking enough risk management steps to combat the issues surrounding money laundering, bribery and corruption. By placing a heavy focus on financial crime it is hoped companies will respond by channelling more resources towards hindering a criminals access to the financial system.

Challenge the poor systems currently in place

The FCA’s pledge “…to challenge the often poor anti-money laundering systems and controls we see in firms of all sizes1, is evidence enough that the FCA feel that firms are failing to implement the necessary infrastructure and controls to hinder financial crime. This particular feature can be easily solved by companies moving away from the old legacy technology that currently plagues the market towards new technology that can more readily code with modern day compliance requirements.

Promote a culture of risk management rather than risk avoidance

Currently, financial services have been refusing to offer services to sectors that are deemed high risk.  For instance, MSBs involved in the international remittance space have routinely been denied access to the UK banking system. The promotion of a risk management culture is required to allow legitimate users access to the financial system and to foster competition. In addition, by pursuing a policy of risk avoidance genuine users of the financial will be forced underground and thus, counter intuitively, increasing the risk of financial crime.

What this means for Financial Service Companies

  1. UK firms will be expected to have robust systems in place to ensure that they do not inadvertently facilitate financial crime.
  2. It will be expected that financial services do not simply reduce their risk exposure by denying certain sectors access to the financial system
  3. As the FCA will continue visiting firms that are at a high risk of financial crime, companies will be required to present the efficient, auditable and secure solutions they have in place.


Business Plan 2015/16