FCA’s review into challenger banks uncovers deficiencies in financial crime controls – JD Supra

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Hogan Lovells
In recent years, the financial services industry has seen an exponential growth in the popularity of challenger banks in the UK. Digitally-driven, technologically innovative and efficient onboarding processes are some of the attractive features on offer to customers looking to manage their finances with ease and convenience. However, the FCA’s recent review has identified that some challenger banks still have room for improvement in complying with their anti-money laundering and sanctions obligations.
The FCA recently published its findings on a review into the financial crime controls implemented by a sample of challenger banks covering the following areas:
Whilst the FCA has acknowledged that challenger banks have been effective in utilising data and technology to simplify the onboarding process for their customers, the findings have shown that greater focus must be placed on strengthening their financial crime control frameworks to ensure they are robust and fit for purpose.
The FCA has highlighted the following areas that require improvement:
AML and anti-financial crime systems and controls remains a key area of focus for the FCA and its supervision and enforcement teams. These findings show that there is likely to be increased scrutiny of challenger banks and set out a baseline of the FCA’s expectations for other financial services firms in this area. The FCA has made clear that it expects challenger banks to:
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