Our Profession

20th September 2007

Financial Crime including Anti Money Laundering, Combating Terrorist Finance and Fraud

The prevention of financial crime is one of the FSA's four main objectives. Not only is there a regulatory obligation to comply with the FSA's rules in this area, firms must also comply with the UK Money Laundering Regulations 2003 and the legal requirements of the Proceeds of Crime Act 2002 (POCA) and the Terrorism Act 2000.

The FSA's "Defusing the ID issue" working group was set up to make the client identification verification process more user friendly for both consumers and the industry but at the same time to retain the effectiveness of the checks. AIFA was part of the working group to ensure that intermediaries were represented and their concerns were voiced.

As a result of this work the Joint Money Laundering Steering Group (JMLSG) undertook a radical review of its Guidance. This led to a more flexible risk-based approach where consideration is given to both product and client risk. We have seen a move away from gathering reams of paper to verify identity and address, to a more flexible approach where for many clients and types of business firms can verify a client's identity using one document if it is a valid passport or photo driving licence. KYC information makes up the picture together with consideration of the types of transaction that a client makes.

AIFA is a member of the JMLSG which published the revised Guidance which outlines the risk based approach and its application. The JMLSG Guidance is available to download free of charge from their website: www.jmlsg.org.uk. The site is regularly updated with useful information, for example an "aide memoire" for the MLROs annual report was added in December 2006.

The Fighting Financial Crime page of the FSA's website includes links to some useful documents covering money laundering, fraud and market abuse. The page also has a link to the FSA's financial crime library of all related documents and can be found here