The FCA has written a Dear CEO letter to certain firms (‘Annex 1 firms’ – which are firms carrying on the activities noted on page 88 of 99 in this document), which are subject to the Money Laundering Regulations (the MLRs). The Dear CEO letter relates to common controls failings that the FCA has identified in firms’ anti-money laundering frameworks. It has also published a web page highlighting some common issues it has found.
Although most insurance intermediaries will not be captured directly by the requirements of the MLRs, or the DEAR DEO letter, the findings and messages can be applied as good anti-money laundering practice and to all firms’ efforts to reduce and prevent financial crime.
Annex 1 businesses include, for example, some lenders, safe custody providers, money brokers and financial leasing companies.
The common issues the FCA found have been grouped under four headings, which are expanded within the Dear CEO letter:
- Business Model – discrepancies between firms’ registered and actual activities, and lack of Financial Crime controls to keep pace with business growth
- Risk Assessment – weaknesses in Business Wide Risk Assessments and Customer Risk Assessments
- Due Diligence, Ongoing Monitoring and Policies and Procedures – lack of detail in policies creating ambiguity around actions staff should take to comply with their obligations under the MLRs
- Governance, Management Information and Training – lack of resources for Financial Crime, inadequate Financial Crime training and absence of a clear audit trail for Financial Crime related decision-making.