The FSA Consults on Rules to Combat Money Laundering

Phillip Thorpe, Managing Director of Authorisation, Enforcement and Consumer Relations at the FSA, welcomed the CP:

The publication of these draft rules is an important step for the FSA towards meeting the reduction in financial crime objective. The proposed rules are sensible and pragmatic and their implementation should neither exclude anyone nor over-burden the industry.

The FSAs Role

The Financial Services and Markets Bill gives the FSA a range of powers to counter the risk of money laundering within authorised firms. These include the power to make rules specifically in relation to the prevention and detection of money laundering and institute criminal proceedings for breaches of the Money Laundering Regulations. These regulations are unaffected by the FSAs new powers which the FSA intends to use to increase confidence that existing requirements are being met consistently and effectively. The FSA expects firms whose systems and controls are already at acceptable levels to be able to comply with the proposed rules with few changes or difficulties.

The Proposals

The FSAs money laundering role will comprise setting and enforcing standards on anti-money laundering systems and controls in FSA-regulated businesses. The essence of these systems and controls are:

- to take care when commencing business with a new customer; - to be alert to the possibility of money laundering by a customer or a prospective customer; - where suspicions of money laundering arise, to communicate them to the criminal authorities; - to keep records which may prove significant for subsequent criminal investigations and prosecutions; - to ensure senior management oversight and control; - to secure and maintain the informed participation in these systems of all relevant employees of the business.

Notes for editors

1. The FSA is the independent body established by parliament to regulate the financial services industry and protect consumers.

2. The Money Laundering Regulations 1993 oblige those operating within the UK financial sector to maintain certain systems and controls to prevent and identify money laundering. The UK financial services industry has also played an important role in this process, with the Joint Money Laundering Steering Group (JMLSG), a collective body of over a dozen trade association, producing guidance notes on the 1993 regulations.