The FCA financial crime watchlist is growing—here’s how to stay off it

The financial crime watchlist isn’t something any firm wants to be on. But with a recent statement from Metro Bank confirming it has now been added to the watchlist, despite just securing a major refinancing deal, it’s evident that the FCA is really cracking down on non-compliance.

The regulator’s watchlist is comprised of companies that pose the greatest risk to the highly regulated sectors. Metro was added to the watchlist because of financial crime risks found in its back books and inefficient financial crime controls over the group’s account provisions.

But with so many regulations to bear in mind, it can be difficult to know if you’re doing everything to maintain full compliance. Here are some of our top tips for staying compliant and keeping off the regulator’s watchlist.

 1. Implement comprehensive Know Your Customer checks 

Any business can be targeted by fraudsters wanting to commit money laundering and other financial crimes. And while these criminals are levelling up their tactics, there are still many measures businesses can put into place to manage the risk of money laundering.

Know Your Customer (KYC) checks are integral to protecting businesses from bad actors, giving organisations reassurance about customer identity, and ensuring they are fully compliant with the AML regulations. Similarly, products such as Politically Exposed Person and Sanction checks help organisations to deal with high-risk customers appropriately.

As an added benefit, implementing optimal KYC processes will help your firm to meet the requirements laid out in the FCA’s new Consumer Duty—particularly those mentioned with the intention of achieving consistently good customer outcomes, as KYC checks can significantly accelerate your customer onboarding process, enhancing the overall experience.

2. Run Source of Funds checks 

Being aware of where your customers funds have come from is a critical part of complying with the regulations and preventing money laundering from occurring. These checks ensure any funds coming into your business are from legitimate sources, so you can rest assured that you are working with reliable, trustworthy, and transparent individuals or businesses only.

Assessing Source of Funds correctly means ensuring that the funds you receive are consistent with the customer’s risk profile and the nature of their business.

Conducting these checks manually can be time-consuming and subject to human error, so automating these checks can significantly speed up your customer or client onboarding and enhance it.

3. Consult customer credit history 

Credit screening is a helpful for gaining an insight into whether any of your potential customers are financial vulnerable.

Taking a deep-dive into customer credit history can give you transparency about adverse information, such as:

• CCJ’s 
• Bankruptcies 
• Details of judgements and registrations, including amounts, location, and dates with address confirmation 

4. Take fraud scores into account 

Fraud of any kind can be detrimental to your organisation, so it’s crucial that you look into the financial background of any customer you consider welcoming into doing business with your firm. Fraud score takes into account any suspicious financial activity patterns your customer has been associated with, and creates a risk profile for them, with a score between 1-1000.

5. Automate your compliance processes 

Keeping up to date with AML and KYC legislation can be a minefield, but failing to do so can you’re putting your business at risk of the same fate as Metro.

Luckily there are options to take the pressure off your firm and put it in the hands of compliance experts. Compliance technology is really taking off and evolving alongside stricter demands from regulated bodies, with automated solutions that give you efficient and reliable results.

Looking to implement these measures and protect your firm? We specialise in automated compliance solutions with capabilities to complete all the above checks and more. 

Get in touch today for a chat and to learn how we can boost your AML and KYC processes for ultimate reassurance and perpetual compliance.