March 7, 2024

FCA issues written warnings to Annex 1 firms with AML deficiencies

On March 3, 2024, the UK Financial Conduct Authority announced that it sent written warnings to the CEOs of certain Annex 1 firms regarding their anti-money laundering (“AML”) failings.  According to the FCA, Annex 1 businesses include lenders, safe custody providers, money brokers and financial leasing companies that engage in activities that require them to be registered and supervised by the FCA to ensure their compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information of the Payer) Regulation 2017.  The companies that received written warnings allegedly failed to implement basic financial crime controls.  Some of the common deficiencies identified by the FCA include discrepancies between the firms’ registered and actual activities; financial crime controls that failed to keep pace with the growth of the business; a failure to properly assess the risks of their own or their customers’ activities; and a lack of resources, training and oversite of financial crime issues and requirements.

In response to the letter, the firms are expected to assess their financial crime controls for common deficiencies within the next 6 months and promptly resolve any identified weaknesses.  The FCA reported that any firms that fail to take suitable steps to address their deficiencies could face regulatory action, including a possible enforcement action.

FCA News Story | FCA Warning Letter