Financial Services, Sectors - Written by on Tuesday, August 16, 2011 0:22 - 0 Comments

The importance of the FSA financial crime consultation – why FSA firms must take note

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We recently wrote about the FSA Financial Crime guide for firms consultation.

In the meantime, all firms should be aware that the FSA will expect all firms to have read the guide and be conversant and compliant with it to the extent that it is relevant to their operations.

If your business is regulated by the FSA – is it familiar with the financial crime consultation?

On the same day the FSA announced its Financial Crime guide for firms consultation Tracy McDermott, Acting Director, Enforcement and Financial Crime Division at the FSA said:

“The FSA has no detailed rules related to financial crime, although we do require financial firms to take measures to contain the risks they may be exploited by criminals. There are, of course, many obligations set out in the law – related, for example, to sanctions, bribery, and money laundering. Many firms we regulate are subject to the detailed specific requirements of the Money Laundering Regulations as well as our high-level rules on anti-money laundering.

What steps should firms take in practice to meet these obligations? In the course of our work on financial crime, we have gained experience about the actions firms can take to protect themselves, their consumers and society from criminal behaviour. We have seen many examples of good practice and some examples of poor practice. We have already shared much of this knowledge, for example, through reports which set out the findings of our thematic reviews. But there is scope for us to do more.Financial crime: a guide for firms draws this guidance together in a form that we hope will be easier for you in the industry to digest and apply to your own business.

The guide is in two parts; the first section offers guidance on a range of financial crime topics and is intended to help firms assess for themselves the adequacy of their financial crime controls. The second part draws together examples of good and bad practice published in our financial crime teams’ thematic reviews.”

We have reported on the FSA’s role in tackling bribery as a regulator, rather than a prosecutor in a number of recent posts for example here and here.  The Aon fine (c£5million) and recent Willis fine (c.£7 million) speak for themselves.

While the SFO will be the lead prosecutor for Bribery Act offences as we have said before the FSA will not sit idly by.

A worse case scenario?  The FSA as regulator uncovers inadequate systems and controls related to anti-bribery.  The FSA takes regulatory enforcement action while sharing the information it uncovers with the SFO who launch an independent criminal investigation in suspected bribery.

FSA regulated firms have received a very clear warning shot in relation to anti-bribery compliance.

We shall be responding to the consultation in due course.

If you would like to feed in your comments to this, via us at no cost, and learn more about this area please let us know.

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