Back to Resources

Financial Conduct Authority announces expansion of the firms required to file a Financial Crime Return

Efficient Frontiers International

20.04.2021

Following a consultation[1] in August 2020, the Financial Conduct Authority (FCA) has increased the number of firms that would be required to submit a REP-CRIM return (see Appendix) to include:

  • All firms authorised under the Financial Services and Markets Act 2000 that are within the scope of the Money Laundering Regulations 2017 and that hold client money or carry on an activity that poses a higher money laundering risk

  • All payment institutions except those that only provide money remittance or account information services and/or payment initiation services

  • All electronic money institutions

  • All multilateral trading facilities and organised trading facilities

  • All crypto asset exchange providers and custodian wallet providers.

 

 

While this may be seen as yet another additional task to be completed, the information provided under the obligation is essential to a firm’s understanding of any potential financial crime risks it may face and is part of the key priorities set out in the FCA’s business plan, that aims to tackle financial crime and ensure anti-money laundering compliance.

Most firms can count on their systems and controls to help identify the data and information needed to complete a report as required. However, it is essential that the data contained is relevant, up to date and understood. Essential elements to achieve this include having the relevant understanding of your clients and business combined with a robust KYC process.

In our experience, this is an opportunity to enhance your anti-money laundering and financial crime risk management policies, procedures, systems and training.

Next Steps:

Firms that have been added to the scope of REP-CRIM for the first time will need to be prepared to submit a return when it is due on 30 March 2022[2]. A complete understanding of the firm’s business structure is essential; these are simple questions addressing the core issues relating to financial crime.

EFI is well equipped to ensure your processes, procedures and systems are compliant and that any questions around your policies and procedures are understood, the key risks are identified and mitigated to provide the necessary data as effectively and efficiently as possible.

 

We can help you:

  • Understand your business and customers and the threats they may pose from a
    • Money laundering;
    • Fraud; and
    • Financial crime perspective
  • Ensure you have clear policies and procedures in place regarding:
    • high risk jurisdictions
    • your definition of PEPs
    • SARs filing

 

Contact EFI today to get ready ...

 

Appendix:

In December 2015, the FCA published their 11th quarterly consultation paper (CP15/42[3]) in which they explained that they did not gather financial crime information from firms regularly, instead relying on the use of ad hoc data requests. As a result, CP15/42 proposed the introduction of a new Financial Crime Return, the REP-CRIM.

The REP-CRIM is 35 questions long[4] and its purpose is to allow the FCA to inform their perceptions of financial crime and their existing prevention procedures. Some of the information required from obligated firms is:

  • the location of their customers;
  • the jurisdictions that the firm has business in that it considers pose a high risk;
  • the resources the firm allocates to tackling financial crime;
  • the number of Suspicious Activity Reports (SARs) the firm files with the authorities;
  • sanctions and asset freezes; and
  • the firm’s general views on which are the most prevalent types of fraud.

 

The goal of this extension of the Annual Financial Crime Reporting Obligation is to provide firm-specific information about financial crime from a wider set of firms, across an increased variety of sectors and firm sizes. The additional information will allow the FCA to have a supervisory approach, be more data-led and broaden their understanding of firms that may have inherent money laundering risks due to their activities.

 

[1] https://www.fca.org.uk/publication/consultation/cp20-17.pdf

[2] https://www.fca.org.uk/publication/policy/ps21-4.pdf

[3] https://www.fca.org.uk/publication/consultation/cp15-42.pdf

[4] https://www.handbook.fca.org.uk/form/sup/SUP_16_Ann_42A_20161231.pdf