Of Relevance to:
Firms falling within the criteria within SUP 16.23; those persons with responsibility for oversight of financial crime

A reminder that a new financial crime data return (REP-CRIM) comes into force on 31 December 2016 – see Regulatory Roundup 75 and 78.

The draft rules first appeared in FCA Quarterly Consultation No.11 (CP15/42) published last December, although the then drafting required more than one reading to confidently ascertain which firms were excluded from the reporting obligation.

The final – and redrafted – rules have now been published in PS16/19 (“Financial Crime Reporting: feedback on Chapter 6 of CP15/42 and final rules”) and will appear in (new) SUP 16.23 (in CP15/42 the rules were destined to appear in SUP 16.22 but the latter will now concern reporting under the Payment Accounts Regulations).

  • SUP 16.23.1 lists those firms that REP-CRIM will not apply to e.g. P2P platform operators.
  • The table in SUP 16.23.2 lists those firms that REP-CRIM will apply to e.g. banks, mortgage lenders.
  • SUP 16.23.2 concerns those firms that REP-CRIM may apply to subject to meeting the criteria set out therein.
  • SUP 16.23.2 advises us that REP-CRIM will not apply to firms that have reported revenue of less than £5m at its last Accounting Reference Date (“ARD”) and (it’s and ‘and’ rather than an ‘or’ so both conditions must be satisfied) who only have permission for one or more of the following activities:
  • advising on investments;
  • dealing in investments as agent;
  • dealing in investments as principal;
  • arranging (bringing about deals) in investments;
  • making arrangements with a view to transactions in investments;
  • assisting in the administration and performance of a contract of insurance in relation to non-       investment insurance contracts;
  • agreeing to carry on a regulated activity;
  • advising on pension transfers and pension opt-outs;
  • credit-related regulated activity;
  • home finance mediation activity;
  • managing investments;
  • establishing, operating or winding up a collective investment scheme;
  • establishing, operating or winding up a personal pension scheme;
  • establishing, operating or winding up a stakeholder pension scheme;
  • managing a UCITS;
  • managing an AIF;
  • safeguarding and administering investments;*
  • acting as trustee or depositary of a UCITS;
  • acting as trustee or depositary of an AIF; and/or
  • operating a multilateral trading facility.

* this activity captures both “arranging safeguarding and administration of assets” and “safeguarding and administration of assets (without arranging)”.

The return has to be submitted within 60 business days (it was originally going to be 30 days) of the firm’s ARD (SUP 16.23.7).

In view of the short time lines the FCA will permit the first return to be completed on a best endeavours basis – see Transitional Provision TP1(1.2).

The rules and transitional provisions, as well as a copy of the return and guidance notes, can be found in Appendix 1 of PS16/19.

Note that the return does ask probing questions such as:

  • which jurisdictions – in ISO 3166 format – does a firm operate in that it has assessed as ‘high-risk’ (Q 3B);
  • number of SARs reported to the NCA (Q 19B);
  • number of full time equivalent UK staff with financial crime roles (Q 25); and
  • the firm’s view of the top three most prevalent frauds which the FCA should be aware of (Q30 – 35) – although the guidance does advise that this question is not mandatory.

In the light of this we would recommend that those firms that find that they are subject to REP-CRIM reporting to familiarise themselves with the information requested and consider whether any changes to procedures etc. will be required in order to ensure that relevant information will be captured and readily retrievable.