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9th December 2015

The Future of Anti-Money Laundering Regulations: An Examination

The Accuity AML Risk Reduction and Compliance Europe Conference was held yesterday where the FCA’s Head of the Financial Crime Department, Rob Gruppetta, delivered a speech from the regulator on what we can all expect from Anti Money Laundering (AML) Regulations in the future.

Focusing on a number of regulatory and industry developments set to take place in the near future, Mr Gruppetta examined the high level impact these are set to have upon AML regulation.

The topics covered:

Fourth Money Laundering Directive

The UK domestic money laundering legislation will need ‘upgrading’ in light of the implementation of the Fourth Money Laundering Directive (4MLD) throughout Europe.

UK government is set to publish a consultation paper on this shortly and, as Mr Gruppetta points out, this is set to raise ‘some potentially controversial questions’, such as firms, under 4MLD are expected to “screen employees” but what does this actually mean firms must do in practice? In addition whilst current UK regulations require firms to apply higher levels of due diligence to thos in a position to abuse public office for private gain (referred to as Politically Exposed Persons or ‘PEPs’), under the new 4MLD requirements this would be extended to all British public officials, regardless of position.

Whilst the requirements of 4MLD are “set in stone” Mr Gruppetta advises there “the UK does have some degree of flexibility in how it implements the European requirements” and thus urges for those within the industry to engage and comment upon the consultation before the closing date of 22nd January 2016.

Financial Crime Return

In addition, Mr Grupetta took the opportunity to remind firms of the regulator’s recent Quarterly Consultation Paper that proposes additional new data relating to firms’ financial crime risks be reported upon. This proposed new regulatory return is set to allow the FCA to detect emerging financial crime risks and to help them target their own supervisory work more accurately.

The new report will mean that firms will need to provide the regulator with financial crime risk information such as which countries they assess as high-risk and whether types of fraud being encountered are on the increase or decline.

The Senior Managers Regime & Financial Crime

Under the new Senior Manager Regime (set to be implemented for certain firms from 7th March 2016), one of the new requirements is that firms must allocate the explicit responsibility for overseeing the firm’s efforts to tackle financial crime to a senior manager at the top of the organisation. As Mr Gruppetta informs, this then raises the question of “how does this sit alongside the role of the Money Laundering Reporting Officer (or "MLRO")?”

To dispel any confusion within the industry, Mr Gruppetta informed that “designating the MLRO as a Senior Management Function was to continue to recognise the importance of an approved individual being accountable for ensuring that anti-money laundering controls are properly designed and implemented. In effect, this role is the same as the MLRO under the existing Approved Persons Regime.”

However, he continued “We expect firms to allocate the prescribed responsibility to the most senior individual responsible for reporting to the firm’s governing body on financial crime matters. This may or may not be the MLRO. Where it is not the MLRO, the prescribed responsibility includes the supervision of the MLRO. This is because we recognise that the MLRO may not always be at a senior executive level.”

He further clarified that “while the person assigned the prescribed responsibility is responsible for the firm’s financial crime policies and procedures, all senior managers of operational units in a firm should be taking reasonable steps to mitigate financial crime risk.”

The Future of AML Regulations

With the SMR due for implementation for some firms from next March and with the  EU member states having to integrate the 4th ML Directive into national laws by 26th June 2017, it seems now is indeed a timely moment to review the cumulative affect these new regulations will have on AML regulation in the future.

To view the full transcript of Mr Grupetta’s speech visit the following link:


Future of Anti-Money Laundering Regulations

News & Views News & Views

Read our latest articles, news and views affecting compliance and regulation in the UK Financial Services Industry.

Comment from the FCA:

“We are keen to ensure the overall responsibility for the firm’s policies and procedures – the systems and controls for countering the risk that the firm might be used to further financial crime - should be discharged at the right level in firms, that is to say by someone with sufficient seniority to ensure that the firm as a whole is meeting its financial crime obligations

Mr Rob Gruppetta, ,

Head of Financial Crime, FCA

08 December 2015