Updated Financial Services Authority (“FSA”) financial crime guide – The FSA has four statutory objectives as set out in the Financial Services and Markets Act 2000:
- 1.To maintain market confidence;
- 2.To contribute to the protection and enhancement of stability of the UK financial system;
- 3.Consumer protection; and
- 4.To reduce financial crime and the extent to which it is possible for a regulated business to be used for a purpose connected with financial crime.
In order to assist in its efforts to reduce financial crime, the FSA published the Financial Crime Guide on 9th December 2011. The aim of the Financial Crime Guide is to assist authorised firms understand the FSA’s expectations when it comes to tackling financial crime.
As well as offering practical advice on how firms can reduce the risk of being exposed to and used to further financial crime, the Financial Crime Guide also aims to assist firms assess the adequacy of the financial crime systems and controls they have in place.
The Financial Crime Guide provides guidance on a number of provisions within the FSA Handbook including provisions which require firms to have and maintain effective systems and controls to prevent the risk that they may be used to
- further financial crime (SYSC 3.2.6R and SYSC 6.1.1R) and
-
which relate to guidance on anti-money laundering (SYSC 3.2.6 and SYSC 6.3).
The FSA has consulted twice on proposed amendments to the Financial Crime Guide,
- once in March 2012 and
- further in June 2012.
As a result of the two consultations, the FSA has now published a revised version of the Financial Crime Guide. Changes which have been brought into effect have been made by way of the Financial Crime Guide (Amendment) Instrument 2012 and came into force on 1st November 2012.
- Financial Crime Guide (Amendment) Instrument 2012 = http://media.fsahandbook.info/Legislation/2012/2012_68.pdf
The main changes include:
- Additional examples of bad practice, drawing on recent enforcement action taken by the FSA;
- Additional and expanded self-assessment questions which firms should, where relevant, consider;
- Additional definitions, particularly in respect of
- ‘investment fraud’,
- ‘land banking schemes’,
- ‘mass-marketing fraud’,
- ‘ponzi and pyramid schemes’ and ‘
- share sale fraud’; and
- The addition of two new sections in part 2 of the guide:
- Anti-bribery and corruption systems and controls in investment banks; and
- Banks’ defence against investment fraud.
The Financial Crime Guide – http://fsahandbook.info/FSA/html/handbook/FC/link/PDF
- is not binding on authorised firms and the FSA does not intend for it to be suitable for all firms.
- A risk based approach should be used by firms when implementing the provisions of the guide.
- It should not be treated as a checklist.
- However, relevant persons within firms should ensure that they are aware of the content of the Financial Crime Guide as is relevant to their particular firm.
- Firms should ensure, whether through reference to the guide or through other means, that they have adequate procedures and controls in place to ensure that they are not at risk of being used to further criminal activity.
- Should a firm find itself in a position where it has been used to further criminal activity, the FSA will take comfort from the fact that the Financial Crime Guide has been considered and that adequate controls and processes were adopted as a result.
- As financial crime becomes more sophisticated, it becomes more important that firms ensure their anti-crime policies and procedures are adequate for their business.
LINKS
http://fsahandbook.info/FSA/html/handbook/SYSC/3/2
http://fsahandbook.info/FSA/html/handbook/SYSC/6/1
http://fsahandbook.info/FSA/html/handbook/SYSC/3/2
http://fsahandbook.info/FSA/html/handbook/SYSC/6/3
the Financial Crime Guide. – http://fsahandbook.info/FSA/html/handbook/FC/link/PDF
Financial Crime Guide (Amendment) Instrument 2012 = http://media.fsahandbook.info/Legislation/2012/2012_68.pdf
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