RegTech industry experts have spoken out in support for the Financial Conduct Authority (FCA)’s call for ‘purposeful’ Anti-Money Laundering (AML) controls and action against financial fraud.
Speaking at the AML & ABC Forum 2021, Mark Steward, who is Executive Director of Enforcement and Market Oversight and a member of the Executive Committee at the FCA, addressed some of the investigations, legal cases and challenges connected to money laundering activity in the UK, calling for better systems and controls that are “purposeful, efficient and courageous in identifying suspicious activity.”
Mr Steward stated that the systems and controls currently in place are flawed.
Interestingly, Mr Steward also said that these systems are at significant risk of becoming overly complicated, bureaucratised, vulnerable to gaming by less scrupulous players, and expensive. As such, he stressed that they must be focused “explicitly on the activating purpose and function of those controls, to ensure the system is not just a bureaucratic process and to ensure it cannot be gamed.”
Another area of risk pertains to cryptocurrency firms, which are carrying on business in the UK but are not registered with the FCA, meaning they are likely not complying with money laundering regulations.
Responding to the FCA’s comments, Wayne Johnson, CEO at Encompass Corporation, the leading provider of KYC and AML RegTech software, said:
Existing money laundering and anti-financial crime systems and controls in the UK are far from perfect, and the evolving nature of COVID-19 and remote working has made the fight against financial crime all the more challenging.
In this digital climate, identities can be more easily fabricated, fraud can go undetected and thus money laundering crime has surged over the last 12 months. Consequently, regulators and businesses must readily adapt to the constantly changing climate and impose new policies that get to the heart of this issue, instead of unnecessary, complicated or expensive restrictions on businesses that are already facing financial hardship due to the pandemic.
With new, stricter and more complicated regulations potentially on the horizon, digital transformation and RegTech implementation is no longer a recommendation, but a must for businesses to operate effectively and remain compliant in today’s world.
Without it, adhering to AML obligations efficiently, cost-effectively and comprehensively is just not possible. We know that the fight against financial crime continues to be hugely benefited by sophisticated RegTech solutions which are always on, always working, and can instantly and actively flag suspicious activity.