Blurred lines: weaknesses in retail banks’ financial crime controls

A new letter from the regulator to chief executiveson their anti-money laundering systems identifies confusion between lines ofresponsibilities, sketchy risk assessments and due diligence, flawedtransaction monitoring, as well as unclarity around SARs. Banks appear to bemore rigorous in some areas of their operations than in their financial crimecontrols, suggests Denis O’Connor.

Denis O’Connoris a fellow of both the Institute of Chartered Accountants inEngland & Wales and the Chartered Institute of Securities and Investment.He was a member of the British Bankers’ Association Money Laundering Committeefrom 2003-10 and a member of the Joint Money Laundering Steering Group’s boardand editorial panel between 2010 and 2016. He has been a frequent speaker atindustry conferences on financial crime issues, both in the United Kingdom andabroad.

The Financial Conduct Authority recentlypublished a ‘Dear CEO’ letter that it sent to the chief executives of retailbanks operating in the United Kingdom, in which the regulator outlined commonfailings in banks’ financial crime systems and controls. [1] While it observedsome examples of effective control frameworks and good practice, the supervisornoted it was “disappointed to continue to identify, across some firms, commoncontrol weaknesses in key areas of firms’ financial crime systems and controlframeworks”.