FCTR 5.1 Introduction

Who should read this chapter? This chapter is relevant, and its statements of good and poor practice apply, to all firms for whom we are the supervisory authority under the Money Laundering Regulations.

In March 2008 the FSA conducted a review of firms’ implementation of a risk-based approach to anti-money laundering. This followed the move to a more principles-based regulatory strategy from August 2006, when we replaced the detailed rules contained in the Money Laundering sourcebook with high-level rules in the Senior Management Arrangements, Systems and Controls sourcebook (SYSC) of the Handbook.

The FSA visited 43 firms in total and gathered additional information from approximately 90 small firms with a survey. The report explored in depth a number of key areas that required improvement, including a review of staff training and the need to ensure staff are aware that it is a constant requirement to ensure AML policies and procedures are up to date and effective.

Due to the wide range of firms the FSA visited, there were a number of different findings. There were many examples of good practice, particularly in the way the larger firms had fully embraced the risk- based approach to AML and senior management’s accountability for effective AML. The FSA also recognised that smaller firms, which generally represent lower risk, had fewer resources to devote to money laundering risk assessment and mitigation.

The contents of this report are reflected in FCG 2 (Financial crime systems and controls) and FCG 3 (Money laundering and terrorist financing).