7 Apr 2016 10:20am

FCA launch crackdown on money laundering in wake of Panama papers

The FCA has pledged to crack down on money laundering after leaked data from law firm Mossack Fonseca exposed the scale of individuals and companies using offshore structures to conceal their wealth

The FCA confirmed it has written to a “number of firms” about disclosures in the Panama papers, including those on the regulator’s Systematic Anti-Money Laundering Programme.

A spokesperson said, “We are working closely with a number of other agencies who are also looking at this.

"As part of our responsibility to ensure the integrity of the UK financial markets we require all authorised firms to have systems and controls in place to mitigate the risk that they might be used to commit financial crime.”

The spokesperson added that the FCA has published its annual Business Plan, which identifies financial crime and anti-money laundering activity as one of its priorities for the year.

Other areas of focus include pensions, wholesale financial markets, advice, innovation and technology, the treatment of existing customers and firms’ culture and governance.

John Griffith-Jones, chairman of the FCA said, “We remain determined to ensure that markets work effectively and fairly and, where necessary, we will use our enforcement powers to reinforce our policy objectives and to provide effective deterrence from irresponsible behaviour.”

Tracey McDermott, acting chief executive of the FCA added, “On financial crime, we will continue to actively protect consumers and markets from the criminals who seek to exploit them. We will take tough action against wrongdoers, working closely with industry and law enforcement to do so. We will also take steps to help people to protect themselves against crime through our ScamSmart campaign.

“We recognise the challenges industry faces in ensuring effective controls to prevent the UK being used to launder criminal funds, while also maintaining services to the whole of society. We will explore ways in which technology solutions can help to deliver effective and proportionate anti-money laundering outcomes.”

The business plan highlights the risk of criminals and terrorists seeking to hide the proceeds of crime among the huge volumes of legitimate businesses in the UK.

The FCA outlined plans to work with law enforcement partners and other agencies to achieve better, proportionate and more efficient anti-money laundering (AML) controls.

The regulator pledged to use intelligence, including from whistleblowers, to take early action to prevent money launderers using the financial system.

The organisation added that it will continue its proactive supervisory assessments of firms "whose business models present a higher inherent risk of money laundering".

The report also revealed plans to roll out a Financial Crime Annual Data return, "which will enable the FCA to focus its supervision on the right firms".

“Where we find firms with material weaknesses in their money laundering controls, we will use our enforcement powers to send a deterrent message to industry and/or impose business restrictions to limit the level of risk. We will also refer cases to other law enforcement agencies where we identify suspected money laundering,” the report said.

The FCA said that it will work closely with the Treasury on the EU’s Fourth Money Laundering Directive (4MLD), which requires implementation in the UK by mid-2017.

The regulator added it will continue to work with the European Supervisory Authorities on drafting guidance to support 4MLD and will also continue to be a major participant in the financial action task force and carry out a mutual evaluation review of the UK in late 2017.

In its report, the FCA said it hopes to improve the perception of the "UK’s AML regime from international assessors and overseas authorities".

It also said it intends to help consumers spot the warning signs and avoid scams.

Alongside its business plan the FCA has also published its budget and fees consultation paper for 2016/17.

The cost of the organisation’s operating activities for the year is £502.9m, an increase of £23.9m.

According to the FCA, this increase is due to the inclusion of consumer credit in operating costs for the first time. Excluding consumer credit, the FCA budget has reduced by £7.6m to £471.4m.

Staffing costs have increased from £279.9m to £316.8m.

The FCA’s annual funding requirement for the year will be £519.3m, an increase of 7.8% on the previous year, which the organisation said is also due to the introduction of consumer credit.

Sinead Moore


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