In this, the second part of our UK Regulatory Compliance series, I’ll be focusing on requirements for preventing financial crime (also called Anti-Money Laundering or AML requirements.) Again, this is not a unique requirement for financial services firms in the U.K. – preventing financial crime is a pain felt all around the world. But firms in the U.K. are particularly feeling the heat at the moment, as the FCA has identified AML as one of its top priorities for 2017. In addition to complying with the requirements set out in the HM Treasury’s Money Laundering Regulations 2007, financial services firms in the UK must address the additional oversight set out in the FCA’s Financial Crime Guide.

Together, the regulatory bodies have prescribed standards for:

  • Client due diligence during onboarding and in regular reviews
  • Establishing and proving source of wealth and source of funds
  • Vetting PEP/REP/High Risk Individuals
  • Alerting and investigating transaction red flags
  • Organisational requirements, such as management oversight

As discussed in my recent MiFID II blog, compliance is not “optional” but the right technology will help meet the requirements more completely and accurately with a minimum of manual effort. There is a great deal of technology overlap between solutions designed to help firms meet AML and MiFID II requirements and that’s a good thing because it’s one less solution to buy. The reality is, if you’re a firm dealing with MiFID II requirements, you’re also dealing with AML regulations (and, for that matter, Suitability and Appropriateness, but that’s a topic for another day.) For this reason, customer-centric CRM, business process management, and integration with diverse solutions are essential elements of an AML compliance strategy. Ideally, firms will need a single solution that:

  • Integrates with back office, banking, and third party data sources and applications. Capturing and confirming all necessary information to calculate risk ratings and fulfil due diligence during onboarding and periodic reviews will create a solid foundation for AML compliance. The ability to prefill forms with existing information and supplement or validate it through integration with screening and banking systems like WorldCheck and Lexis-Nexis, for example, will help ensure an accurate and efficient experience for advisors and clients alike.
  • Streamlines and standardises workflows. If one thing is true of regulations, it’s that they’re never carved in stone. The best way to ensure advisors conduct all necessary due diligence for each type of client (Standard, PEP, REP, and High Risk) is to guide them through the information collection and review steps. With run-time configurable SmartForms and workflows, firms can update forms and processes as often as necessary and roll them out seamlessly to the field.
  • Enables real-time monitoring and reporting. Management oversight is an integral aspect of AML due diligence. Firms will need powerful reporting, analytics, and dashboarding capabilities to stay on top of advisors’ activities and regulators’ demands.

What challenges are you encountering in preparing for upcoming regulatory requirements? Interested in learning more about how we’ve helped leading wealth management and private banking firms demonstrate compliance? Leave me a comment or reach out to me, and I’ll be happy to discuss.