The FCA published its analysis of the annual financial crime data returns of firms subject to the Money Laundering Regulations 2017. This includes retail lending firms. The key findings for retail lenders was that 0.16% out of 761, 437 customers that were exited or refused all lines of business for financial crime reasons during 2019/20 were in retail lending and retail banking. The FCA’s analysis found that retail lending was the second largest sector in 2019/20 that did not undertake automated sanctions screening. It is to be noted that financial service providers must not provide financial services to individuals who are registered on the sanctions list. To ensure adherence with this financial crime prevention initiative, financial services providers should have processes to screen customers against the current sanctions list.
We recommend that retail lending firms review their financial crime systems and controls on, at least, an annual basis (e.g. the suitability/effectiveness of its staff training and awareness program, a review of its financial crime risk assessment and its Customer Due Diligence and Suspicious Activity Reporting processes).