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Compliance Corner: FCA, Wholesale Brokerages, Money Laundering
Editorial Staff
24 January 2025
Financial Conduct Authority "Firms need to keep their controls under review and ensure they are effective against financial crime. This report will help them do that,” Steve Smart, joint executive director of enforcement and market oversight, said. "If firms fail to heed the FCA’s advice and reassess their systems and controls on a regular basis, making enhancements accordingly, there is a very real risk of either supervisory or enforcement action,” Makin added.
The UK’s has said that wholesale brokers must beef up controls and improve training and risk awareness to guard against money launderers.
The watchdog said this part of the financial services sector has made progress, but gaps remain.
The FCA’s report targets wholesale brokers because they play an important role in capital markets and in facilitating deals.
“Good progress has been made since the FCA’s Thematic Review in 2019, including with customer risk assessments, onboarding processes, governance and oversight, and collaboration between trade surveillance and transaction monitoring teams,” the FCA said.
However, firms underestimate the risk that money laundering poses; they rely too much on others in the transaction chain to complete due diligence, among other shortcomings.
"This is further evidence of the FCA’s continued focus on combatting money laundering. Firms should take the time now to consider their systems and controls in light of the FCA’s examples of good and poor practice," Imogen Makin, counsel at WilmerHale, said.