The Financial Conduct Authority has published a report on assessing and reducing the risk of Money Laundering Through the Markets. Money Laundering Through the Markets is the use of capital markets to launder criminally generated cash so that it appears legitimately generated. The report renews the risk assessment of Money Laundering Through the Markets and risks documented in the FCA's June 2019 thematic review. It also sets out the findings of the FCA follow-up review, which it believes will assist brokers and other firms operating in the capital markets to continue to improve their controls and ensure they meet the required standards. The FCA's report provides further insights through practical case studies and examples of good and poor practice.
Overall, the FCA saw good practice and progress in several financial crime systems and controls across larger and smaller firms. However, relevant firms needed to more rigorously tackle the issues raised in the previous thematic review. Key challenges observed include: (i) transaction monitoring; (ii) knowledge of the U.K. Financial Intelligence Unit Money Laundering Through the Markets suspicious activity reporting glossary code; (iii) information sharing; and (iv) documenting customer risk-assessment methods in enough detail. The FCA would like firms to continue reviewing their systems, controls, Money Laundering Through the Markets awareness and training. Moving forward, the FCA will use its supervisory work, to make sure firms are considering Money Laundering Through the Markets risks, and the points raised in this report to drive improvements and reduce risk across the markets. It will also encourage firms and third-party providers to innovate more, to tailor transaction monitoring systems and alerts to capital markets.
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