The FCA's recent 'Dear CEO' letter regarding anti-money laundering systems and controls presents clear enforcement and litigation risks for retail banks.
A month to go
When the FCA wrote its 'Dear CEO' letter to portfolio retail banks on 22 May 2021, highlighting concerns about the quality and effectiveness of anti-money laundering controls, it set a deadline of 17 September 2021 for them to:
- conduct a 'gap analysis' against a set of common control failings identified in its letter; and
- take 'prompt and reasonable steps' to close any gaps identified.
We are aware that since then many retail banks have been hard at work reviewing their AML policies and procedures. Banks that have not completed this work by the FCA's deadline (or are not at least ready to show the gap analysis has been done and any reforms are in progress), are likely to be at risk of regulatory action.
Six key areas to consider
The FCA identified in its letter six key areas of retail banks' anti-money laundering systems and controls where it perceives there are common weaknesses:
- governance and oversight;
- business-wide risk assessments;
- customer risk assessments;
- customer due diligence (particularly enhanced due diligence);
- transaction monitoring; and
- suspicious activity reporting.
Within each area, the FCA made specific observations for firms to consider.
If you would like to discuss any of these issues further, please contact:
