Webinar recording – What firms need to know about a REP-CRIM submission

A few months ago, the FCA extended its existing annual financial crime reporting obligation (termed the “REP-CRIM” by the FCA) to a broader range of firm types.  This change brought a further  4,500 firms into the scope of this reporting obligation.

The FCA first introduced the REP-CRIM in July 2016 for certain firms, including all UK banks and building societies. This currently consists of around 2,500 out of approximately the 22,000 firms that the FCA supervises for compliance with the Money Laundering Regulations 2017 (as amended).

The REP-CRIM return provides the FCA with data on some of a firms’ financial crime risks, such as the number of their high risk jurisdictions and customers, including politically exposed persons (PEPs), the number of suspicious activity reports, data in respect of sanctions screening and views on prevalent frauds. The data collected will, in the FCA’s view, inform its supervision and, potentially, enforcement strategies through a data driven risk based approach.

For those now being brought within scope of REP-CRIM, the new rules came into force on 30 March 2022 and each firm must now submit their REP-CRIM within 60 days of their first Accounting Referencing Date.

Firms should be prepared to submit a complete REP CRIM return which requires their financial crime compliance framework to be organised in such a way that collecting the relevant data is not a resource intensive exercise, or potentially worse still an impossibility

Whereas the data assists the FCA in focusing its resources, it also enables them to identify firms that fail to be able to produce comprehensive and meaningful data which could well trigger some specific attention from the FCA to those firms.

REP-CRIM webinar recording

Please find below the recording of our REP-CRIM webinar:

In this webinar we discussed:

  1. The background and aim of REP CRIM
  2. How it helps the FCA
  3. The data that needs to be collected and produced
  4. What a complete REP CRIM should contain
  5. How to organise a financial crime compliance framework to provide the right data
  6. The risks of incomplete submission

Webinar questions:

Unfortunately, we ran out of time on the day to answer all questions posed to us during the webinar. Please find a list of all the questions as well as the responses below:

Question 1

If we only do business within the UK. Do we need to list all the countries that we choose not to do business with? e.g. FATF Do this all have to be noted on this form (we are a mortgage lender)

Answer 1

Question 3a requires you to list the jurisdictions within which the firm operates. So in 3a you will list the UK only. In 3b you are required to list the jurisdictions that are considered high risk by the firm. The answer you put here will depend on what your policy and risk appetite states and requires. For example, if your business model is only for the UK, then does your risk appetite consider that any country other than the UK should be considered high risk as it falls outside of your risk appetite? If so, you could just enter here, “anything other than the UK”.

 Question 2

What if you only operate business in the UK only. Do we therefore need to list all other countries in 3B

Answer 2

Question 3a requires you to list the jurisdictions within which the firm operates. So in 3a you will list the UK only. In 3b you are required to list the jurisdictions that are considered high risk by the firm. The answer you put here will depend on what your policy and risk appetite states and requires. For example, if your business model is only for the UK, then does your risk appetite consider that any country other than the UK should be considered high risk as it falls outside of your risk appetite? If so, you could just enter here, “anything other than the UK”.

 Question 3 

What if you only operate business in the UK for UK clients but have a client money bank account in Cyprus. Do we list CY as operating jurisdiction even though we do not onboard CY clients.

Answer 3

If you have an operating model only in the UK, but have part of your operating procedures in other countries, i.e. you have a client money account in Cyprus, then you should enter Cyprus as one of the jurisdictions in which you operate, as this has a direct impact on your client base, i.e. the client’s funds are being held in this country, therefore the banking and AML regulatory regime in both the UK and Cyprus can/will impact your client.

 Question 4 

The FCA question: “The jurisdictions within which the firm operates as at the end of the reporting period” refers not only where the company is located or does business, but also where customers are located?

Answer 4

If your customers are located in other jurisdictions to where the firm is physically located, then these countries will form part of the required response here, as the firm is “operating” in those jurisdictions by means of sales/ongoing administration for example.

 Question 5 

What if you have a Worldcheck hit but are unable to eliminate the customer from multiply hits due to same name, thus  request a clean criminal record check. The customer drops off from the onboarding process not wanting to pursue – and thus the account is not opened. Should this be reported to the NCA then?

Answer 5

If you are unable to discount a potential hit without needing a DBS check, I would firstly recommend a review of your screening and review policy and procedures. Asking a customer, or potential customer to obtain a DBS check is excessive, costly, time consuming and could generate an exposure to tipping off/prejudicing an investigation risk. If during any CDD procedure, a client/potential client chooses to walk away rather than respond to the question being asked of them, then you should be considering this action for suspicion. However, if their action is driven by what could be perceived as your unreasonable request, then this would not necessarily need to be reported to the NCA.

Question 6

Will FCA be lenient with regards to a ‘first submission’?

Answer 6

When the first returns were due after December 2016, the FCA did say that they would be mindful of the fact that the first return may be not be ideal and would acknowledge best endeavours. However, since REP-CRIM has now been around for 6  years, in various communications the FCA has made since, it is clear that it expects a well organised firm to have the required data readily available, and that they cannot see any reasons for a submission that is not timely, accurate and complete suggesting that leniency for a poor first submission does not apply and that this may well lead to a regulatory concern.

REP-CRIM review and support

At Complyport, provide a REP-CRIM submission review service where we review and comment on the quality, accuracy and completeness of a submission, which at least for a first submission, can be very helpful. To discuss this service in more detail, please email jan.hagen@complypoirt.co.uk or sana.malik@complyport.co.uk to book in your free consultation meeting.

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,
  • Assistance and reviews of REP CRIM submissions
  • 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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