Some wealth managers to be removed from UK enhanced laundering rules
07 Sep 2020

Some wealth managers and advisers could be removed from a significant tier of anti-money laundering oversight under Financial Conduct Authority (FCA) proposals designed to more accurately reflect the risk of criminal exploitation.

The obligation to report risk factors under the Annual Financial Crime Report (REP-CRIM) rules was originally introduced in 2016 and is currently applied as an additional layer of enforcement to almost one in 10 of the firms regulated under broader anti-money laundering rules.

At the time, the FCA said it would continue to monitor the rules to judge their effectiveness on a cost-benefit analysis.

In a review, the regulator proposed to remove firms that arrange investments, alongside home finance businesses. The rule change will apply to those who arrange for investment to be carried out by a third party, with enhanced disclosure still applying to those who directly influence client assets.

Crypto-trading and deposit firms will be included for the first time, however, alongside an increased number of firms regulated under trading and money transfer rules.

In a consultation document, the FCA said: ‘This additional information will allow our supervisory approach to be more data-led, and broaden our understanding of firms that may have intrinsic [money laundering] risks due to their activities.

‘We consider that this approach will result in improving firms’ money laundering systems and controls, reduce actual risks of money laundering and help improve the overall integrity of the UK financial system.

‘It is also in line and builds on our data strategy, announced earlier this year, to use data and data analytics to transform the way we regulate and reduce the burden on firms.’

By David Campbell, Citywire, 4 September 2020

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