The FCA introduced significant updates to its Financial Crime Guide (“FCG”) through Policy Statement PS24/17. This revision aligns with the FCA’s 2022-2025 Strategy, emphasising proactive and data driven supervision to combat financial crime. The updated Guide reflects comprehensive feedback received during a public consultation in 2024 and aims to enhance firms’ systems and controls against financial crime.
Purpose
The FCG serves as a resource for FCA-supervised firms, providing practical insights and examples of good practices. It underscores FCA’s objectives to ensure consumer protection, market integrity and international competitiveness. By offering updated guidance, the FCA helps firms strengthen their compliance frameworks, ultimately anticipating reducing the risk of financial crime.
Key Changes
The updates outlined in Policy Statement PS24/17 address several critical areas, including:
- Sanctions
The Sanctions chapter has been revised to incorporate lessons learned from the post-Ukraine invasion assessments. Clarifications were made regarding reporting obligations, screening processes and Senior Management accountability. Self-assessment questions and good practice examples now align more closely with UK sanctions frameworks.
- Proliferation Financing
New guidance emphasises Proliferation Financing (“PF”) risk assessments mandated by the Money Laundering Regulations (“MLRs”) 2017. Whilst there were calls for a separate PF chapter, the FCA opted to integrate PF guidance within the broader sanctions framework, citing their interconnected nature.
- Transaction Monitoring
Enhancements to the Transaction Monitoring section highlight innovative technologies like AI for identifying suspicious activities. The Guide now includes best practices for governance and system testing, promoting tailored approaches to firm-specific risks.
- Cryptoasset Businesses
With the growing prominence of Cryptoassets, the Guide explicitly addresses the responsibilities of Cryptoasset firms under the MLRs. While sector-specific guidance is avoided, firms are encouraged to adopt the broader principles of financial crime controls outlined in the FCG.
- Consumer Duty Alignment
The Guide integrates Consumer Duty principles, ensuring firms balance compliance with delivering good outcomes for retail customers. Firms are urged to adopt customer centric measures, such as clear communication during due diligence processes.
- Data Security and Information Sharing
Updates include examples of effective cybersecurity practices and guidance on leveraging the Economic Crime and Corporate Transparency Act 2023 for data sharing to prevent financial crime.
Future Focus Areas
The FCA has identified areas for further development, including:
- Expanded guidance on fraud, particularly Authorised Push Payment scams and digital fraud;
- Integration of AI and machine learning in financial crime detection; and
- Enhanced clarity on the treatment of Politically Exposed Persons, particularly domestic ones, following legislative amendments.
Next Steps for Firms
Firms impacted by these changes should evaluate their financial crime systems and controls, ensuring alignment with the revised Guide. This may involve updating policies, training and monitoring systems. The FCA will continue to engage with firms, refine the guidance and publish findings from future consultations.
How can Complyport help?
Complyport can support your firm in understanding and following these changes by providing:
- Regulatory Guidance: helping your firm understand the FCA’s expectations and providing expert advice on the relevant regulatory requirements;
- Documentation updates: assistance in drafting appropriate policies and procedural documents;
- Ongoing Support: providing ongoing support to ensure that your firm remains compliant as regulations evolve;
- Training: providing training sessions to educate staff on the practical requirements and best practices for compliance.
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