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Corporate finance firms may have previously been seen as low in the FCA’s priority list, but this has clearly changed based on its latest foray into the sector. A survey was recently issued by the regulator to corporate finance firms, collecting information about their anti-money laundering controls and processes. If you’ve not yet formally conducted an enterprise-wide risk assessment around your approach to financial crime, now is very much the time.
Why did the FCA conduct the survey?
Having looked at the survey, it’s clear that the regulator is keen to understand the controls each corporate finance firm has in place to prevent money laundering during their business. Corporate finance firms are exposed to money laundering risk both in respect of their clients and the transactions they are advising on, regardless of whether they are taking part in fund raising activity or the receipt of consideration.
Cross-border transactions can also give rise to heightened risk where there are overseas sellers / investors who operate from potentially complex and opaque corporate structures. This makes it difficult to identify the source of funds and the ultimate beneficial owner behind parties to a transaction.
Who was the survey sent to?
From our understanding, the FCA have sent the survey on a random basis to a selection of corporate finance firms. It’s interesting to note that the regulator highlighted its intent to conduct more detailed reviews of recipients who don’t complete the survey, so it’s important to respond.
What does the survey cover?
The scope of the survey is quite comprehensive; topics include governance and oversight, risk assessments, policies and procedures, levels of client due diligence, risk designations of clients (including disclosing numbers of clients in different risk ‘buckets’), transaction monitoring and sanctions screening, suspicious reporting, resources, and outsourcing. Principal firms with appointed representatives must also respond to additional questions in relation to their arrangements for their appointed representatives.
The survey, in addition to the FCA’s Dear CEO letter published in September 2023, illustrates that the corporate finance sector is getting more attention from the regulators. This means that, even if you haven’t received the survey or might not have the regulator imminently knocking on your door, we think this is an opportune moment to review your anti-money laundering (AML) control framework, test the effectiveness of your control measures, identify any gaps, and implement necessary measures to meet the latest regulatory standards.
How can Bovill Newgate help you strengthen your AML compliance?
We can support by conducting an in-depth AML health check, provide AML training to the staff, review your financial crime risk assessment, and advise you on the steps that need to be taken to mitigate the money laundering risks and rectify any identified weaknesses.
Get in touch using the form below to find out more or if you need clarity on any of the regulatory requirements relating to AML compliance.
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