Retail banks’ AML frameworks: mind the gap (analysis)

The FCA has now published its Dear CEO letter sent last month to Retail Bank CEOs which sets out common weaknesses it has observed in recent supervisory work. The letter sets an ambitious timeline for banks to conduct a gap analysis by 17 September 2021 against the weaknesses outlined - and firms can expect to be asked what steps they have taken in response and face regulatory intervention if these steps are deemed to be inadequate.

The letter also notes the FCA's focus on whether senior managers are discharging the responsibility they all hold to counter financial crime risks, suggesting that senior managers would be well advised to take stock of how this responsibility is reflected in the reasonable steps frameworks they have in place.

The areas of concern are consistent with those identified previously in supervisory and enforcement publications on the same theme: lack of clarity in the governance and oversight of financial crime risks, inadequate business wide and customer risk assessments, CDD/EDD shortcomings, transaction monitoring systems that aren't calibrated or tailored appropriately, and unclear suspicious transaction reporting policies and processes.

AML remains a top priority for our clients and for the FCA; this letter makes clear the FCA's patience for those who persist in not getting it right may be running out.