The UK Financial Conduct Authority’s new Annual Financial Crime Report rules will come into force on 31 December 2016. PRA and FCA authorised firms will have to submit an Annual Financial Crime Report within 60 business days of the end of their financial year. Firms with a 31 December 2016 financial year end will be required to submit their first report in March 2017.
Tackling financial crime is a priority for the FCA. It has a statutory obligation to enhance the integrity of the UK’s financial system, which includes protecting it from exploitation by criminals; and many regulated firms are subject to the UK’s Money Laundering Regulations. It might therefore seem odd that the FCA doesn’t routinely gather information from firms about financial crime, the risks they’re exposed to, or how they manage those risks. The FCA has made some new rules that will rectify this.
These rules will apply to every PRA and FCA authorised firm that’s subject to the UK’s Money Laundering Regulations, except (a) credit unions; (b) peer-to-peer lending platform operators; (c) authorised professional firms; (d) firms with a Part 4A Permission that’s limited to certain credit activities; and (e) firms with a revenue of less than £5m, if their Part 4A Permission is narrow enough to meet certain tests. (The FCA has “exclude[d] pure [general insurers and general insurance intermediaries] from the initial implementation, with a view to bringing them into scope at [an unspecified] later date.“)
The rules will be in section 23 of chapter 16 of the FCA’s Supervision manual, and they’ll require every relevant firm to:
- prepare an Annual Financial Crime Report, which covers (a) the financial year ending on its latest accounting reference date; and (b) the parts of its business that are subject to the UK’s Money Laundering Regulations (only), using a prescribed form;
- submit the Report to the FCA, using the FCA’s online reporting systems, within 60 business days of the firm’s accounting reference date;
- prepare their reports on a best endeavors basis if the annual accounting reference date falls between 31 December 2016 and 30 December 2017 – that won’t be good enough for later Reports.
At least in the FCA’s rule making instrument, the Report is less than 2 sides long; and the notes on how to complete it are more than 15 sides long.