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News for Members

28 May 2015

Derisking - Banks’ Management of Money Laundering Risk - FCA Expectations

The CCA is aware that some of our members have experienced difficulties when trying to access services from their banks.  We have approached the FCA with our concerns and in response, they have brought their recent public statement on the matter to our attention:

We are aware that some banks are no longer offering financial services to entire categories of customers that they associate with higher money-laundering risk. Money Transmitters, charities and FinTech companies are among the sectors particularly affected by this and we understand that some banks are also withdrawing from providing correspondent banking services.

Banks have told us that this helps them comply with their legal and regulatory obligations in the UK and abroad. However, we are clear that effective money-laundering risk management need not result in wholesale derisking.

We require banks to put in place and maintain policies and procedures to identify, assess and manage money-laundering risk. These policies and procedures must be comprehensive and proportionate to the nature, scale and complexity of the bank’s activities. They should help banks identify the risk associated with different types of customers and inform not only the level of customer due diligence measures banks apply but also their decisions about accepting or maintaining individual business relationships.  This requires banks to use judgement and common sense and is what we would regard as an effective risk-based approach.

Where a bank does not believe that it can manage the money-laundering risk associated with a business relationship effectively, it should not enter into, or maintain, that business relationship. But the risk-based approach does not require banks to deal generically with whole categories of customers or potential customers: instead, we expect banks to recognise that the risk associated with different individual business relationships within a single broad category varies, and to manage that risk appropriately.

While the decision to accept or maintain a business relationship is ultimately a commercial one for the bank, we think that there should be relatively few cases where it is necessary to decline business relationships solely because of anti-money laundering requirements. As a result, we now consider during our AML work whether firms’ derisking strategies give rise to consumer protection and/or competition issues.

We encourage banks to consider our financial crime guidance, which we believe helps banks adopt proportionate and effective anti-money laundering systems and controls.

The FCA’s approach to enforcement of breaches of AML obligations is set out in our Enforcement Guide.


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CCA News - January 2015 cover

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