The UK’s Financial Conduct Authority (FCA) significantly increased its supervisory activity on firms’ anti money laundering and terrorist financing (AML/CTF) controls in the 2023-24 reporting period.
The FCA plays a crucial role in the fight against money laundering and terrorist financing (AML/CTF). A key part of its approach is desk-based reviews (DBRs) and on-site visits to assess firms’ compliance with regulations. In the 2023-24 reporting period, the FCA conducted a large number of these reviews.
The scale of reviews
A total of 816 DBRs and 21 on-site visits were undertaken. The breakdown of the reviews across risk categories reveals a focus on high-risk firms: 656 DBRs targeted high-risk firms, compared to 128 for medium-risk and only 32 for low-risk firms. This reflects the FCA’s risk-based approach, where the most vulnerable firms to money laundering abuse were prioritised. The number of on-site visits was considerably fewer, although still up considerably on the previous year, with 19 full-scope visits conducted on high-risk firms and two on medium-risk businesses.
The number of desk-based reviews and on-site visits has increased over the past year:
This 253% increase in DBRs and 200% increase in on-site visits demonstrates the FCA’s increased focus on AML/CTF compliance, particularly on high-risk firms.
Compliance findings
Only 7% of the firms were found to be fully compliant, while 19% were considered generally compliant, and 3% were outright non-compliant. A significant portion of assessments did not reach a final conclusion within the reporting period.
While the percentage of outright non-compliant firms remained relatively stable, the number of businesses assessed as fully compliant dropped significantly from 43% to just 7%. This suggests that continuous improvement in AML/CTF processes is required throughout the financial sector.
Common compliance issues
The report also identifies recurring themes in non-compliant firms. These include ineffective business-wide risk assessments, inadequate or insufficiently robust customer risk assessments, insufficiently risk-sensitive enhanced due diligence, and the need for improvements in compliance monitoring and quality assurance. These recurring issues emphasise the need for a more proactive and holistic approach to AML/CTF compliance by firms.
FCA’s proactive approach
The FCA’s methodology utilises several key approaches, including the Modular Assessment Proactive Programme (MAPP), which replaced the previous Systematic AML Programme (SAMLP). The Outliers/Proactive AML Programme (PAMLP) leverages data analysis tools to identify hotspots and outliers, guiding supervisory focus. Focused Supervisory Interventions (FSI) target specific issues identified through data and intelligence, enabling tailored engagement with firms. Finally, multi-firm work identifies risks and provides industry-wide feedback.
How Neopay can help
With the FCA intensifying its supervisory activities, ensuring your firm is prepared for a desk-based review or on-site visit is more critical than ever. Neopay specialises in supporting firms through the entire compliance process, helping them meet regulatory expectations efficiently and effectively.
Our expert team is able to assist with:
- Identifying where gaps might exist before an assessment
- Strengthening business-wide and customer risk assessments
- Enhancing due diligence processes to align with FCA expectations
- Putting in place effective compliance monitoring and quality assurance systems
- Providing tailored training to ensure staff understand and implement AML/CTF requirements effectively
By working with Neopay, you can lower compliance risks, improve regulatory outcomes, and demonstrate an active commitment to AML/CTF compliance. Get in touch today and find out how we can support your business.
