Banks’ defences against investment fraud – The FSA has published a report on “Banks’ defences against investment fraud” together with a consultation on proposed guidance on this issue. The report contains the findings of the FSA’s assessment of the systems and controls in place in several retail banks to contain the risks posed by investment fraudsters.

The review revealed that little governance specifically targeted at investment fraud is in place amongst all the banks the FSA assessed. The FSA is particularly dissatisfied with the banks’ ability to detect where their customers may be complicit in investment fraud, mainly due to customer-facing staff responsible for ongoing monitoring of customers often lacking the knowledge to identify investment fraud.

However, the FSA noted that there were good examples of banks maintaining intelligence on investment fraudsters, although measures used were not consistent across the industry.

The consultation contains examples of good and poor practice developed in the light of the FSA’s review, together with proposed new text for the fraud chapter of its publication “Financial crime: a guide for firms”.

The deadline for comments on the guidance consultation is 23 August 2012.

Copies of the FSA’s report; the guidance consultation on examples of good and poor practice; and the relevant webpage are available.

http://www.fsa.gov.uk/static/pubs/other/banks-defences-against-investment-fraud.pdf

http://www.fsa.gov.uk/static/pubs/guidance/gc12-07.pdf

http://www.fsa.gov.uk/library/policy/guidance_consultations/2012/1207