5. Independent assessments of our AML supervision

5. Independent assessments of our AML supervision

The International Monetary Fund (IMF) recently conducted its periodic Financial Sector Assessment Program (FSAP) review of the UK, assessing – among other things – our AML supervision of banks. It noted that significant progress had been made since the UK was assessed in 2006 by the FATF, the global standard-setting body for AML and related threats to the integrity of the international financial system, as well as the previous IMF FSAP in 2011. It also noted that our supervisory framework for AML and combating the financing of terrorism operates on a risk-based approach, under which firms that have been classified into a higher risk band receive ‘extensive and intrusive supervision’.

The IMF concluded that the intensity and scope of supervision of the higher risk banks (those subject to our SAMLP reviews and other proactive inspections), which represent over 95% of the UK retail banking market and over 75% of wholesale banking revenues, was adequate. However they had some concern about the intensity and scope of supervision of other banks. We welcome the IMF’s assessment of our supervisory approach, which we consider to be proportionate, effective and in line with the wider risk-based approach adopted by the UK authorities.

We will also consider our response to the review of the UK’s Anti-Money Laundering Regime by the Better Regulation Executive (BRE) once it is published. We have seen the evidence submitted to the BRE’s review. Some respondents suggested the FCA’s supervisory approach was not consistent with a risk-based approach; they believed our inspection staff had a ‘checklist’ mentality and preconceptions about what they expected to see in a firm.

We regard our approach to AML inspections to be key to understanding the money laundering risks in individual firms and how they are being managed. Nevertheless we recognise that we could do more to explain our approach, particularly to the smaller firms we engage with less often. We are considering better use of communication tools to deliver this, to see how we can target all our outreach work better, drawing on new technology as well as using traditional tools like holding a financial crime conference, as we plan to do in the autumn of 2016. Our current outreach tools also include our thematic reviews, updating our guidance for firms after we publish each review, and using webcasts to disseminate our findings more widely. We also attend stakeholder forums and speak at conferences and seminars.