A “Dear Chief Executive” letter has been sent to the bosses of 1,000 firms by financial regulator the FCA warning about lapses in anti-money laundering rules and monitoring.
In the letter, the FCA reminds these Tier-1 firms that if they are involved in lending, safe custody, money broking and financial leasing they have to be registered and supervised by the FCA even though they are not formally authorised and regulated.
Common errors include discrepancies between firms’ registered and actual activities; a failure of financial crime controls to keep pace with business growth; lax risk assessment; and inadequate resourcing.
“Financial crime is a priority for us and initial findings from our data-led review of a sample of Annex 1 firms indicates that some are still not getting the basics right,” said the regulator.
Emad Aladhal, an FCA director, added: "Poor financial crime controls make it easier for criminals to abuse the financial system and damage the integrity of UK markets.
"We have made fighting financial crime a priority and though we’ve seen progress generally amongst the firms we supervise, this report highlights some basic failures amongst Annex 1 firms which are not subject to our full regulatory regime.
"These must be addressed."