Watchdog intent on preventing financial firms being used as a "conduit for crime"
In a warning shot to industry the FSA's director of enforcement, Tracey McDermott signalled a renewed emphasis to tackle financial crime.
At the FSA’s financial crime conference McDermott explained that the government's Financial Conduct Authority (FCA) will beef up efforts to prevent financial firms being used as a "conduit for crime".
She added that the FCA will continue “encouraging the industry to strengthen its defences and educating and warning consumers about the dangers they may face”.
The watchdog also unveiled a financial crime guide that aims to improve firms' understanding of their requirements on anti-money laundering, terrorist financing, fraud, data security, bribery and corruption, sanctions, and weapons proliferation financing.
The FSA also published an anti-money laundering review on how banks should manage high risk customers including PEPs (politically exposed person.)
The review found that some banks appeared unwilling to exit profitable relationships where there appeared to be an unacceptable risk of handling the proceeds of crime.
Three quarters of the banks sampled failed to take adequate measures to establish the legitimacy of the source of their customers’ wealth.
A third document showed weaknesses in many banks' internal controls on mortgage fraud. This is a worrying finding that demonstrates very little progress in tackling one of the causes of the banking crisis.
"Lenders will have to implement programmes to strengthen their anti-fraud systems and controls," said the FSA.
Hector Sants FSA chief executive said: “Trust in the financial services sector is at an all time low and the new regulatory arrangements provide the opportunity to restore confidence in an industry which has generated in excess of £15bn detriment over the last two decades.”
For the full text of Sants' speech click here.
