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FCA letter highlights banks "outdated" and "unreliable" AML defences

Martin Cheek, MD at SmartSearch, says: “The retail banking sector has been particularly vulnerable during the pandemic due to the increase in financial crime and money laundering attempts to wash dirty money through the system.

“So, it is a cause of concern that the Financial Conduct Authority (FCA) has felt the need to write to banks to remind them of their obligations under the law to ensure their anti-money laundering (AML) procedures are up to scratch.

“The letter from the FCA highlighted common control weaknesses in areas including Governance and Oversight; Risk Assessments; Due Diligence; Transaction Monitoring and Suspicious Activity Reporting (SARs).

“What this clearly tells us is that a significant number of banks in the sector are still relying on outdated and unreliable forms of verification when it comes to onboarding new customers.

“When you look at the areas the FCA has highlighted as failing, such as due diligence, governance and oversight, and risk assessments, these are all areas where the introduction of technology and automation can ensure full compliance.

“That is the message the FCA should be sending out as regulated firms in the banking sector need to make the shift from manual methods of verification to a fully automated digital solution that is more secure, more efficient and cost-saving.”

Published: 15 July 2021