FCA Readyness

The Financial Conduct Authority ('FCA') expects firms to take reasonable care to establish and maintain effective systems and controls for compliance with applicable requirements and standards under the regulatory system, and for countering the risk that a firm might be used to further financial crime.

Reasonable for one firm, may be excessive or insufficient for another. Applicable requirements and standards also vary, depending on the type of activity undertaken, the nature of internal controls and also, the extent to which activity undertaken is susceptible to any inherent risk of fraud, dishonesty or other impropriety. A firm's ability therefore, to articulate what is reasonable could influence the level of interest (or intervention) pursued by the regulator.

Core requirements

As a Regulator the FCA:

1. Publishes guidance for firms, designed to help firms adopt a more effective, risk-based and outcomes-focused approach to mitigating financial crime risk
2. Seeks to exercise its enforcement powers in a manner that is transparent, proportionate, responsive to the issue, and consistent with its publicly stated policies
3. Expects firms to establish and maintain risk-based systems and controls; and encourages firms to be open in their dealings with the FCA concerning any material issues identified

Operational impact

Senior Management should ensure clarity of responsibility and accountability in the financial crime framework, and that internal arrangements:

• Do not reflect poor practice as identified in FCA published guidance
• Promote risk-based and outcomes-focused systems and controls
• Comply with regulatory and legislative requirements in higher risk situations (e.g. the Money Laundering Regulations and enhanced due diligence)
• Provide for the identification and disclosure to the FCA, of significant events involving fraud, error or irregularity
• Take account the size, nature and complexity of a firm's operations when deciding whether certain controls are appropriate to its business

How we can help you

FCRM assists clients to prepare for regulatory review or external scrutiny, to document the control framework and provide (or ensure) clarity of role/responsibility for financial crime in the organisational framework and across the operating environment.

We provide independent advice and objective challenge to the 'status-quo', assisting clients to identify and where necessary, remediate potential gaps in financial crime strategy and the operational framework, to promote compliance with regulatory requirements for financial crime.