Regulatory news

Money laundering review produces mixed bag

22 March 2008

In the paper, ‘Review Of Firms’ Implementation Of A Risk-Based Approach To Anti-Money Laundering’, the FSA welcomed findings that suggested that most small, medium and large firms had made moves to minimise the risks in their businesses.

However, the regulator conceded that the industry as a whole needed to do more to tackle the growing and costly problem.

The study said: ‘We found clear room for improvement in some firms. Firms must ensure that staff are adequately trained and they should not treat reviewing anti-money laundering policies and procedures as a one-off exercise.’

For medium and large firms, the regulator said that some had failed to consider reviews of risk management, and in assessments to money laundering had ‘varied greatly in scope and sophistication’.

It added that ‘many firms had not actually considered how often their risk assessment would be reviewed’.

The paper also suggested that the move to the risk-based approach had made ‘brokers’ business more difficult as lenders had all conducted individual risk assessments of their business, clients and products, resulting in a wide range of different risk levels, with some lenders even classifying all mortgages as low risk’.

Mike Pendergast, IFA at Zen Financial Services, admitted that lenders had made changes to their risk management to help combat fraud. He said: “A lot of companies have simplified their offerings, which has helped. It has made it a lot easier, faster, and more secure.”