May 24 2016
The FCA, along with fellow agencies and authorities, has a long-standing programme of work in place to ensure the UK financial system is a hostile environment for money launderers. The work not only continues, but has been reinforced by the Government’s recent action plan.
The firms we regulate have commercial freedom, subject to some restrictions, to choose who they do business with. Banks have always had to make decisions about whether or not to provide their services to a prospective customer, or maintain a relationship with an existing customer, whether that is an individual, a business or any other organisation. A number of factors will influence those decisions, ranging from the potential credit risk and profitability of a relationship, to concerns about the reputational consequences of providing services to certain customers.
The Bank of England and Financial Services Act 2016 introduced a requirement for the FCA to issue guidance on the meaning of Politically Exposed Persons (PEPs) for the purposes of money laundering regulations. We will work with HM Treasury to deliver this requirement alongside the transposition of the 4th Anti-Money Laundering Directive later this year.
In recent years, we have become aware that banks are withdrawing or failing to offer banking facilities to customers in greater volumes than before. There is a perception that this is driven by banks’ concerns about the money laundering and terrorist financing (ML/TF) risks posed by certain types of customer. This is known as ‘de-risking’. It has been suggested that this trend is influenced by big fines imposed on banks in recent years by regulators and prosecutors, particularly in the US, for primarily historic weaknesses in their anti-money laundering (AML) defences and for breaches of financial sanctions.