Financial Crime & AML 

During the calendar year, there are certain events which stick out like sore thumbs, simply due to the stress-levels associated with them.  FCA Gabriel reporting and PII renewal are the main 'regulars' that come to mind, partly because of the additional work needed every year, in terms of our internal reporting systems - since the Regulator's demands for more data are insatiable.  This year, the FCA's Retail Mediation Activities Return has mushroomed beyond our normal expectations, with the addition of several new sections, including the snappily-named 'REP-CRIM-Financial Crime Report', which runs to eight pages and now reflects the full weight of the updated regulations.

The focus of this latest report is perhaps self-explanatory, but it is indicative of the kind of legal and financial environment which IFAs are now required to operate within.  Having spent quite a bit of time working through the EU's 2015 updates, now in preparing ourselves for the UK's June 2017 legislation, it is quite clear that the demands and requirements have developed to a point which would be beyond the time, expertise and capacity of most smaller advisory firms to manage.  Indeed, the sheer complexity and concentration of the new bureaucracy has led me to replace our normal approach ('Kindly Kev's Klarifying Kommentary') into something that has more substantive teeth to it.

It would be naive to conclude that this is simply bureaucracy for bureaucracy's sake - a kind of final flush of pre-Brexit emanations from Brussels, simply to make us hanker for more, as we cast off anchor, and float off into the North Sea.  No doubt there is a bit of that, included somewhere: and, of course, us Brits appear to have highly-developed gifts for gold-plating EU regulations, beyond the dreams of the most enthusiastic Brussels bureaucrat.  MiFID comes to mind as an example.  It does seem, however, as if this burgeoning section in the rulebooks is actually being driven by a dramatic upsurge in financial crime.  Over the last year or so, we've had to write practical guidance for Administrators, covering such topics as combatting fraud, data-security and basic data-protection.  There's a great deal more risk out there - to our clients, and therefore - by extension - to us.

Now, reluctantly, we've put together the biggest-ever update to our guidance on Financial Crime and AML.  It's not exactly light-reading - and longer-term ValidPathers will know that we do try hard to make this kind of stuff accessible (because nobody else will!).  It almost goes against the grain to be writing something that reads just like a compliance manual - but, such is the detail in the regs, that there's no way around it.  Perhaps in the next update, we'll include talking bears, fauns and dwarves, but this time around it's the plain unvarnished content.  There's even a new Suspicious Activity Report (SAR), designed to collect more detail, and compile our main monitoring database.

Helpful hint...

  1. Visit the new page of guidance
  2. Print it off
  3. Go through it in reasonable detail, thinking about your own processes
  4. Use it with your staff, to ensure that they're up to speed
Kevin Moss, 12/05/2017