The Financial Conduct Authority (FCA) has called on wholesale brokers to enhance their risk awareness and training to guard against money laundering.
A review by the regulator found that gaps still remain in brokers’ money laundering defences.
The FCA said it focused on wholesale brokers in its review because of the role they play in capital markets in facilitating deals.
It suggested that good progress had been made since its Thematic Review in 2019, including with customer risk assessments, onboarding processes, governance and oversight, and collaboration between trade surveillance and transaction monitoring teams.
However, the FCA identified several areas where firms needed to improve to better protect against money laundering. These included an underestimation of the risks of money laundering firms are exposed to, over-reliance on others in the transaction chain completing appropriate due diligence checks on customers, and limited information sharing between firms.
“The flow of capital is an essential part of a thriving and competitive market, but tainted cash must not be allowed to pollute the rest,” said joint executive director of enforcement and market oversight, Steve Smart.
“For the UK financial services industry to grow, investors and institutions need to have trust in it. Integrity is vital for that, and firms play a key role in helping to detect criminal activity.
“Firms need to keep their controls under review and ensure they are effective against financial crime.”
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