Key Changes to the Annual Financial Crime Reporting (REP-CRIM) Obligation

As part of the FCA’s ongoing efforts to tackle financial crime, thousands of regulated firms will have new financial crime reporting requirements from 30 March 2022. Currently, around 2,500 firms (including banks, building societies, and mortgage lenders) are required to submit these annual crime reports, or ‘REP-CRIM’s. A policy update released in March 2021 means that this year, roughly 4,500 additional firms will have to submit a REP-CRIM report for the first time. By expanding the scope of REP-CRIM, the FCA can gather more firm-specific information and data to improve their understanding of financial crime threats and inherent money laundering risks.

What is REP-CRIM?

First introduced in 2016, REP-CRIM is a way for the FCA to gather more information about a firm’s regulated activities and the potential money laundering risks associated with them. The FCA’s policy statement PS21/4: Extension of Annual Financial Crime Reporting Obligation contains updates to the policy, including the types of firms now covered by the requirements. This was published in 2021, following the consultation CP20/17 in 2020.

PS21/4 widens the scope of existing annual financial crime reporting obligations to include additional firms that could pose higher money laundering risks. Changes include removing the annual revenue threshold, meaning that firms below this threshold who undertake higher risk activities (e.g. dealing as principal) are now in scope,  Approximately 4,500 new firms will be impacted by this change when it comes into force on 30 March 2022.

New REP-CRIM requirements

The following firms will now be required to provide the FCA with a REP-CRIM:

  • All payment institutions except firms that only undertake money remittance and/or AIS/PIS
  • All electronic money institutions (EMIs)
  • All Multilateral Trading Facilities (MTFs)
  • All Organised Trading Facilities (OTFs)
  • All cryptoasset exchange providers and custodian wallet providers

Additionally, “Certain FSMA authorised firms falling within the scope of the MLRs” (Money Laundering Regulations 2017) will now have to provide a REP-CRIM if they:

  1. “Hold client money or assets” or
  2. “Carry out an activity that we consider poses a higher money laundering risk.” These include:
    • Dealing as agent or principal
    • Managing investments
    • Managing an alternative investment fund (AIF)
    • Assisting in the administration and performance of a contract of insurance (non-investment insurance contracts)
    • Firms, with total revenue of £5m or more, with advising and arranging on investments/pension transfers or credit-related permissions

A full list of impacted activities can be found in the Table in SUP 16.23.

The FCA has included two further exemptions from the REP-CRIM obligation:

  • “Home finance mediation activity”
  • “Making arrangements with a view to transactions in investments”

What does this mean for firms?

Firms that are currently exempt and will remain exempt from REP-CRIM

Nothing is required for these firms.  However, they should consider assessing their systems and controls in case the FCA changes the in-scope criteria again.

Firms that currently submit REP-CRIM

The standard process will remain the same; there are no significant changes and nothing new is required.  However, such firms should ensure that their existing procedures identify the information that the REP-CRIM report will require.

Additional firms to be included under REP-CRIM obligation reporting

Firms being brought into scope by the new rules must submit their first REP-CRIM within 60 business days after their first Accounting Reference Date via RegData.  In-scope firms with a year-end of 31st March will become subject to the new requirement immediately and will be required to report by the end of June 2022.  Therefore, they should ensure that they are able to gather and report the information that will be required.

REP-CRIM requires firms to provide data on the following areas:

  • Section 1 – Operating Jurisdictions
  • Section 2 – Customer Information
  • Section 3 – Compliance Information
  • Section 4 – Sanctions-Specific Information (not mandatory for cryptoasset businesses)
  • Section 5 – Fraud (not mandatory for all firms)

Much of this information should be readily available. However, firms should note that, under the Customer information heading, the number of client relationships either refused or terminated must be reported, primarily due to financial crime concerns.  This is not always information that firms retain, so it is critical that firms are aware of what information is needed to be reported so that they can accurately identify and record it.

Anti-Financial Crime Support – How can Complyport Help?

Our experienced Financial Crime and Forensics team led by Martin Schofield—one of the world’s leading specialists in the field—brings a wealth of experience to every project we are engaged in. Our highly experienced financial crime professionals and forensic experts, in subjects such as anti-money laundering, counter terrorist financing, anti-bribery and corruption and fraud and regularly help our clients navigate the complexities of the financial crime and money laundering environment. Services offered by Complyport include:

  • Financial crime health checks and audits,
  • Implementation of financial crime, AML, CTF, ABC, Fraud and market abuse controls and frameworks,
  • Ongoing advice on financial crime, AML, CTF, market abuse and fraud prevention,
  • Authoring/reviewing financial crime policies,
  • Outsourced MLRO support
  • Outsourced KYC and CDD support,
  • Assistance in identifying Politically Exposed Persons (PEPs),
  • Assistance in navigating international sanctions,
  • Support with preventing market abuse and insider dealing,
  • Expert Witness in Financial Crime cases
  • Forensics and Investigations
  • Design and/or delivery of online or face to face financial crime training

If this article has raised any questions, or you think your firm may require assistance, please contact either Martin Schofield via martin.schofield@complyport.co.uk or Jan Hagen via jan.hagen@complyport.co.uk to book in a free consultation.

About Complyport

Complyport is the City’s market leading consulting firm supporting the UK financial services industry for over 20 years. We specialise in providing Governance, Risk and Compliance services to support the regulated financial services industry to raise standards and thrive.

Complyport advises and assists firms to become authorised and to comply with the rules and requirements of regulators on an ongoing basis. Our vision is to be there for our clients every step of the way, helping them change, grow, and excel through expertise, insight, and innovation, and in so doing to become our clients’ most valued supplier and trusted advisor.

We have successfully assisted over 1000 firms to become authorised with the FCA and EU and are providing regulatory support to over 600 regulated firms on an ongoing basis globally. With presence in the UK and EU, as well as via our Associates Network, Complyport can assist firms across multiple jurisdictions.

Complyport’s multidisciplinary consultants possess deep expertise in their field, having acted in FCA skilled person reviews, as expert witnesses in legal cases and as expert investigators for firms or their legal advisers.

Day to day, we conduct audits and reviews of a firm’s products, processes, policies, and procedures to identify scope for business, to determine the impact of regulatory developments and to verify compliance with local regulations. Our clients tell us we live our values; we are driven, agile and collaborative.

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