One of the ways that the FSA disseminates information is by giving speeches, and publishing transcripts of those. Such was the case in a speech given by Tracey McDermott at the end of September 2012 on the role of the FSA, and subsequently the FCA, in tackling financial crime. The speech was fairly wide ranging, covering a number of historic topics. However, it also laid out rather newer topics that may be of interest to readers.
One such is a new thematic review by the FSA on trade finance. The review is looking at how banks that finance international trade control the financial crime risks in such businesses. For example, one way in which international trade can be abused is by under or over invoicing, which allows criminals to transfer value between countries. The FSA's project involves visiting a range of banks to understand their current practices, focusing in particular on risks of letters of credit and bank collections. We have seen in the past how thematic reviews often lead to enforcement action, and we shall have to see what emerges in coming months (the report is expected this summer).
For all the fanfare about the success of its credible deterrence approach, the FSA recognises that the industry is suffering a crisis of public confidence. Aside from the again threatened robust enforcement action, Tracey McDermott also talked about prevention. She highlighted two aspects. The first is a strong management commitment to better culture and better values. The second is incentive structures, on which the FSA has been consulting. This was expressed to be an area of ongoing interest to the FCA. We can expect that the FSA and the FCA will look to back up their key messages with tough action, should shortcomings be found in either of these two areas.