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SmartSearch: FCA must use full weight to combat fraud

Jessica Bird

September 17, 2020

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Following a recent Freedom of Information request, the Financial Conduct Authority (FCA) has confirmed that so far in 2020 no criminal prosecutions have been made under the current anti-money laundering (AML) legislation, and that it has discontinued half of its 14 investigations into possible breaches of AML rules in the UK.

However, with various factors resulting from the COVID-19 crisis, including increased levels of vulnerability and financial strain among consumers, as well as widespread adoption of new technology and digital processes, the UK is arguably at a crisis point for financial crime.

It is therefore important for the FCA to be flexing its muscles in order to prevent AML, according to SmartSearch.

Martin Cheek, managing director at SmartSearch, said: “Due to the COVID-19 crisis, we face an increasing threat of financial crime in the UK, and indeed around the world.

“So at a time when we should be ensuring every effort is made to crackdown on that increased threat, it’s a concern that the FCA has halved the number of cases it is investigating, and has yet to bring a single criminal prosecution.

“There has of course been some welcome enforcement activity with hefty fines handed out in recent months.

“However, now more than ever it would send out the right message if the FCA were to really flex its muscle and bring the full weight of their enforcement power to bear on offenders.”

The FCA said in a statement that it has changed its approach so that it is now conducting investigations into suspected breaches of the AML regulations that might give rise to either criminal or civil proceedings.

With less than four months left of the year it remains to be seen whether any criminal prosecutions will yet be brought about in 2020.

SmartSearch said that, just as importantly, the FCA needs to play a key role in encouraging firms to move with the times and use more secure technology to protect themselves against fraud and financial crime.

Cheek said: “The FCA faces a real challenge in dealing with the fallout of COVID-19 in terms of the increased levels of fraud and money-laundering, as criminals seek to take advantage of the situation.

“Unfortunately, there are still too many firms operating outdated processes that have not kept pace with the increasingly sophisticated methods employed by criminals, and they are vulnerable in this current climate.

“While we understand that methods of investigation may have changed at the FCA, it’s going to be important to see a criminal prosecution brought soon in order to draw a line in the sand and convert their intention into action.”


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