On June 22 2011 the Financial Services Authority published a consultation paper entitled "Financial Crime: a Guide for Firms" (CP11/12). The proposed guide aims to improve firms' understanding of the FSA's expectations in this area. A collation of existing FSA statements on financial crime, it provides guidance on anti-money laundering, terrorist financing, fraud, data security, bribery and corruption, sanctions and weapons proliferation financing.
The paper contains a dedicated section on anti-money laundering which is relevant to all firms that are subject to the Money Laundering Regulations 2007. It is also useful for other professionals, such as mortgage brokers, general insurers and insurance intermediaries. It gives examples of best and worst practice for a range of anti-money laundering procedures relating to governance, money-laundering reporting officers, risk assessment, customer due diligence, ongoing monitoring, enhanced due diligence, record keeping and the reporting of suspicious transactions.
The paper also includes a thematic review of how banks manage their money-laundering risks. It particularly focuses on their management of high-risk customers (including politically exposed persons), correspondent banking relationships and wire transfer payments. The review concludes that some banks appeared unwilling to refuse or withdraw from particularly profitable business relationships, including relationships with politically exposed persons, even when there appeared to be unacceptable risk of handling the proceeds of crime.
Among other findings, three-quarters of the banks in question failed to take adequate measures to establish the legitimacy of their customers' wealth and the source of the funds to be used in the relationship. The FSA has expressed serious concern about the findings and has revealed that two banks have been referred to enforcement following the identification of "apparent serious weaknesses in their systems and controls for managing high-risk customers, including" politically exposed persons.
The consultation period will close on September 21 2011.
For further information on this topic please contact Michael McKee at DLA Piper UK LLP by telephone (+44 87 0011 1111), fax (+44 20 7796 6666) or email (firstname.lastname@example.org). The materials contained on this website are for general information purposes only and are subject to the disclaimer. ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription. Register at