FSA welcomes banks anti-money laundering measures

The risk-based initiative, which was developed in close co-operation with the FSA, will ensure the major UK banks are at the forefront of international best practice in tackling money laundering and terrorist financing.

Speaking at the FSAs latest conference on money laundering issues, Carol Sergeant, Managing Director of the FSA, said:

"We very much welcome the initiative and the common sense way it will be handled. It is designed to deal with the portfolio of existing customers, who have either never been subject to anti-money laundering checks because they became customers before the legal requirements were introduced in 1994 or who became customers when the checks were not as effective as they are today."

"Know your customer is an important anti-money laundering control and this initiative will enable the banks to take the necessary steps to establish a consistent standard across all customers, irrespective of when the account was opened."

"We fully support the banks risk-based approach. This is absolutely in line with our whole approach to regulation. The banks will be using profiling techniques, filters and other risk-based techniques in order to focus effort on the potentially high and medium risks in the historical customer portfolios."

"In tackling this issue banks and other firms may need to seek information from some existing customers. Just as we know that our security when flying depends on being prepared to wait while our baggage is checked, I hope that those customers who are contacted by their banks will recognise the public interest in co-operating with any necessary checks."

"It will be important for the major banks example to be followed more generally in the financial sector. The FSA intends to discuss both with individual firms and their associations proposals for taking this work forward on a similar basis. We will also consult later in the year about introducing a rule to ensure this issue is gripped by all firms and that high standards are in place across the whole financial services sector."

"The Statement of Principles issued by the banks today also commits them to continuing to invest heavily in automated transactions monitoring systems and operational processes which are significantly enhancing their ability to detect suspicious transactions and new money laundering techniques. This also goes well beyond current minimum international requirements and is warmly welcomed."

Notes for editors

1. Carol Sergeant was speaking at the FSA Anti-Money Laundering Conference at Le Meridien Grosvenor House, Park Lane. The key note speaker was Ruth Kelly MP, Financial Secretary to the Treasury.

2. The six major UK banks Abbey National, Barclays, HBOS, HSBC, Lloyds TSB and The Royal Bank of Scotland Group - have today issued a Statement of Principles for Fighting Crime and the Financing of Terrorism.

3. The FSA is the principal regulator of the UK financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

4. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.