HM Treasury's annual AML and CFT supervision report - which concerns, amongst other things, the FCA's supervision and enforcement of the Money Laundering Regulations (MLRs) for the period 6 April 2018 to 5 April 2019 - shows that of those approximately 22% of firms visited which were non-compliant with the MLRs, the most frequent breaches also included the most basic:
- inadequate client risk assessments;
- ineffective application of enhanced due diligence, leading to poor identification and monitoring of high risk customers;
- inadequate AML policy procedures; and
- the lack, or inadequacy, of AML training for relevant staff.
A recent report by Duff & Phelps which reviews global AML enforcement trends over a longer period, shows that these breaches have been and continue to be some of the most common identified as leading to enforcement action across geographies.
Given the prominence of AML enforcement on the political and enforcement agenda, firms should be vigilant in reviewing (and updating as appropriate) their AML systems and controls including, importantly, ensuring that their staff are adequately trained in understanding, identifying and monitoring suspicious activity.
"recent penalties were imposed for exactly the same procedural shortcomings that regulators have been highlighting since 2015: in due diligence on new customers, management of AML measures, monitoring of suspicious activity and ensuring compliance with the rules."