FCA must ‘flex its muscle’ over AML rules – SmartSearch

The FCA must “flex its muscle” to bring its full weight of enforcement power down on criminals breaking anti-money laundering (AML) rules, according to AML expert, SmartSearch.

A Freedom of Information (FOI) request made to the FCA has confirmed that no criminal prosecutions under the current ALM legislation have been made so far in 2020.

The FOI also revealed that the regulator has discontinued half of its 14 investigations into possible breaches of AML rules in the UK.

SmartSearch managing director, Martin Cheek, suggested that as a result of the COVID-19 crisis, the country is facing an “increasing threat of financial crime”.

“At a time when we should be ensuring every effort is made to crackdown on that increased threat, it’s a concern that the FCA has halved the number of cases it is investigating, and has yet to bring a single criminal prosecution,” Cheek commented.

“There has of course been some welcome enforcement activity with hefty fines handed out in recent months. However, now more than ever it would send out the right message if the FCA were to really flex its muscle and bring the full weight of their enforcement power to bear on offenders.”

In a statement, the FCA said it has changed its approach so that it is now conducting investigations into suspected breaches of the AML regulations that “might give rise” to either criminal or civil proceedings.

With less than four months left of the year, however, SmartSearch noted it remains to be seen whether any criminal prosecutions will still happen in 2020, and added that the regulator will play a key role in encouraging firms to “move with the times” and use more secure technology to protect themselves against financial crime.

“The FCA faces a real challenge in dealing with the fallout of COVID-19 in terms of the increased levels of fraud and money laundering, as criminals seek to take advantage of the situation,” Cheek added.

“Unfortunately, there are still too many firms operating outdated processes that have not kept pace with the increasingly sophisticated methods employed by criminals, and they are vulnerable in this current climate.

“While we understand that methods of investigation may have changed at the FCA, it’s going to be important to see a criminal prosecution brought soon in order to draw a line in the sand and convert their intention into action.”

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