Financial Conduct Authority survey finds widespread anti-money laundering control gaps at corporate finance firms and plans follow-up action

The Financial Conduct Authority (FCA) published survey findings indicating that around two-thirds of corporate finance firms that are not required to submit financial crime returns may be falling short of requirements under the Money Laundering Regulations. The FCA is sharing the findings to help firms address weaknesses and will write to potentially non-compliant firms setting out the improvements it expects. The survey of 270 corporate finance firms found that 11% reported having no documented business-wide risk assessment, and 10% said they did not retain documented evidence of customer due diligence. Among principal firms with appointed representatives, 29% said they did not conduct financial crime risk assessments for their appointed representatives and 6% reported not monitoring appointed representatives’ compliance with financial crime regulations, including through on-site visits or audits. The FCA also highlighted examples of good practice, including regularly updating business-wide risk assessments to reflect emerging risks and using detailed management information to strengthen controls, while 97% of respondents said they regularly report financial crime concerns to senior management. The work forms part of the FCA’s wider financial crime strategy and is described as one of several initiatives planned over the next five years to strengthen oversight and raise standards across the sector.