Regulatory change and financial crime

We look at what Tracey McDermott has to say about the changes to financial regulation authorities and how that may affect monitoring financial crime.

Speaking on the hot topics in financial crime, Tracey McDermott, Interim Director of the Enforcement and Financial Crime Division at the FSA, gave some interesting insight into how the change to a Twin Peaks regulatory authority in 2013 will see the newly established Financial Conduct Authority (FCA) taking responsibility for the FSA’s financial crime remit.

Ms McDermott discussed how the FCA will continue to focus on issues of strengthening the financial community’s defences and maintaining the integrity within the sector, and emphasised that there would be a lot of continuity in their work to tackle financial crime. She also specified that the monitoring of firms’ efforts to tackle money laundering should be among the top priorities of the FCA.

Referring to a review into how banks manage money laundering risks, Ms McDermott voiced concern over the handling of customers who were Politically Exposed Persons (PEPs);

“We found banks’ management of high-risk customers was often weak.” Ms McDermott said in her speech.

“Too many did not take meaningful steps to understand who they were doing business with, and too many failed adequately to manage the money laundering risk associated with these [PEP] customers.”

While acknowledging that the FSA’s changes to guidelines on financial crime were not a change to rules but guidance to help support financial institutions on good and poor practice, Ms McDermott said that by complying with the guidelines, institutions would demonstrate their compliance with the rules.

In closing, Ms McDermott stated, “We are committed to retaining our focus on these issues, as well as our wider financial crime remit, through into the new regulatory world.”

Find out more on financial crime hot topics in Tracey McDermott’s full speech to the APCIMS.

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