Tuesday 13 July 2021 10:55 am

FCA threatens action against retail banks for poor financial crime controls

The Financial Conduct Authority (FCA) has issued a warning to retail banks about their continuing weaknesses and failings surrounding financial crime controls in a letter published in full today.

The letter, which was penned by David Geale, the Director of Retail Banking & Payments Supervision for the FCA, and sent to banking industry chiefs across the UK, was issued in May and made public via the FCA’s website hub on 29th June.

The contents of the message including an outline of the key issues and weaknesses. Governance and oversight, risk assessments and due diligence were some of the common control weaknesses the FCA identified. The letter also included a request that each firm complete a gap analysis of each of the identified weaknesses and take prompt and reasonable steps to resolve them by 17 September 2021.

“The consequences of poor financial crime controls in a high-risk sector such as retail banking,” the FCA wrote in the letter, “are significant.”

Geale went on to say: “It can lead to criminals abusing the financial system to launder the proceeds of crime, supporting further criminal activity and damaging the integrity of the UK financial market.”

The regulator warned retail banks that it was likely to request proof of actions taken after this date and, if they did not meet their requirements, it may consider regulatory action in order to manage the financial crime risk posed.

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