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Financial crime systems and controls during Covid-19:


In an update to the Business Plan, on 6 May,Financial crime systems and controls during Covid-19: the FCA published new 6 May 2020 guidance update on financial crime systems and controls during Covid-19:

  • Criminals are already taking advantage of the…pandemic to carry out fraud and exploitation scams through a variety of methods, including cyber-enabled fraud.

Those seeking to launder criminal proceeds or finance terrorism are likely to also exploit any weaknesses in firms’ systems”.

The guidance includes practical steps for firms.

  • Remain vigilant to the risk of fraud and exploitation scams: firms should continually analyse and amend their control environment to respond to the changing threats; this includes timely reporting of SARs for any new threats.
  • Consider how best to re-prioritise AML and CTF activities: the FCA is clear that firms should not address any operational challenges simply by changing their risk appetite. However, firms may need to “re-prioritise or reasonably delay” some AML and counter terrorism financing activities (which could include ongoing customer due diligence reviews, or reviews of transaction monitoring alerts). This should be done on a risk basis and with a clear plan to return to the usual process “as soon as reasonably possible”. Note separate guidance published by the UK Government on 12 May (with, in contrast, no reference to the pandemic) requiring information sharing within corporate groups and a consistent application of AML/CTF controls.
  • Continue client identity verification: the FCA “expects firms to continue to comply with their obligations on client identity verification” and that the list provided of various remote client identity verification methods “does not represent a relaxation of requirements”.