UK Conduct Regulator Proposes to Extend Financial Crime Reporting Obligation

The U.K. Financial Conduct Authority has launched a consultation proposing to extend the annual financial crime reporting obligation to regulated firms undertaking regulated activities that the FCA views to be potentially posing as a higher money laundering risk. Responses may be submitted until November 23, 2020. The FCA intends to publish its final policy and amended rules by Q1 2021.

The FCA introduced the annual financial crime reporting obligations in 2016 for banks, investment firms, building societies, mortgage lenders, large electronic money institutions, certain large consumer credit firms, life insurers and retail investment and mortgage intermediaries. Relevant firms must provide details annually on, among other things, the jurisdictions and types of customers as well as the number of suspicious activity reports to the FCA. The obligation only captures certain firms subject to FCA supervision under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations of 2017.

The FCA is proposing to extend the obligation to the below firms, irrespective of their revenue threshold:

• all authorized firms that hold client money or assets or that carry on an activity that the FCA considers to be posing a higher money laundering risk;
• all payment institutions except those that only carry out money remittance, account information services or are EEA authorized payment institutions;
• all electronic money institutions;
• all multilateral trading facilities and organised trading facilities; and
• all crypto-asset exchange providers and custodian wallet providers.

The FCA is also proposing, going forward, to exclude from the obligation the activities of home finance mediation and making arrangements with a view to transactions in investments. The FCA does not consider these activities to be within the scope of the MLRs.

View the consultation paper.

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