global insurance management

Financial Crime (Oct '13)

Nov 11 2013

Financial Crime - Update

Reason for issue: Update and reminder.

Action required:  Read and ensure your CPD record in your Training Log is updated.

This paper is part of a series that will be issued over the next few weeks and is intended to support the ongoing training and competence of all staff in relation to their knowledge and understanding of how we look to combat financial crime.

This first paper is a general overview and reminder, which will be followed by ones that will be more topic-specific

What is Financial Crime?

The Financial Conduct Authority (FCA) defines Financial Crime as any kind of criminal conduct relating to money or to financial services or markets, including any offence involving:

  1. fraud or dishonesty; or
  2. misconduct in, or misuse of information relating to, a financial market; or
  3. handling the proceeds of crime; or
  4. the financing of terrorism;

The FCA also states that “Tackling financial crime is a key part of the FCA’s remit. We help to protect market integrity by fighting financial crime.  Our aim is to protect consumers and prevent firms from being used as a channel for financial crime.”

So the areas covered by our obligations to prevent Financial Crime are as follows:

  • Fraud
  • Money Laundering
  • Data Security
  • Financial Sanctions
  • Market Abuse; Suspicious Transaction reporting

In accordance with FCA Rules, we are required to "establish, implement and maintain adequate policies and procedures sufficient to ensure compliance of the firm including its managers, employees and appointed representatives (or where applicable, tied agents) with its obligations under the regulatory system and for countering the risk that the firm might be used to further financial crime".

Helpfully, the FCA only requires that our relevant systems and controls must be "comprehensive and proportionate in nature, scale and complexity of its activities".

How do we ensure we are not used to further Financial Crime?

We are continually reviewing our approach to ensure that we are doing our best to stop money laundering, terrorist financing and fraud and corruption. This includes:

  • Regularly reviewing and amending our policies and procedures so that they remain relevant and up-to-date;
  • Training our staff on how to prevent, detect and react to financial crime;
  • Checking our financial crime systems and controls to ensure that they work efficiently and effectively.

Key Legislation

Generally, the FCA does not oversee compliance with legal requirements, nor is it responsible for identifying and prosecuting criminal offences. As indicated, the FCA requires firms to understand and manage the risks from all financial crimes.  Its powers, with some exceptions, are therefore limited to taking action against firms for failing to have appropriate systems and controls to prevent it.

Although the FCA does not enforce the criminal offences it is important to understand them in order to put in place effective controls. The key legislation relating to areas of financial crime is as follows:

The Fraud Act 2006

Sets out the ways in which fraud can be committed.

The Proceeds of Crime Act 2002

Sets out the primary money laundering offences and offences that apply to employees of regulated firms, e.g. failure to report.

The Money Laundering Regulations 2007

Implements the 3rd EU Money laundering Directive and sets out the procedures firms must use to prevent money laundering.

The Joint Money Laundering Steering Group (JMLSG) Industry Guidance

Provides Treasury approved guidance on how to implement the Money laundering Regulations for financial services firms.

The Terrorism Act 2000

Sets out the money laundering offences that relate to terrorism and terrorist funding.

The Bribery Act 2010

Sets out the bribery offences that apply to individuals and the corporate offence of failing to prevent Bribery.

The Criminal Justice Act 1993

Sets out the criminal offences relating to insider dealing.

The Financial Services and Markets Act 2000

Gives the FCA powers to enforce civil market abuse offences.

The Code of Market Conduct

Implements the key parts of the EU Market Abuse Directive and sets out the behaviours that constitute civil market abuse.

Individual sanctions legislation

A number of different statutory instruments, generally enacted as United Nations Measures under the United Nations Act 1946 give the Treasury powers to designate individuals and organisations which financial services companies are prohibited from dealing with, including giving advice.


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