Bank Regulation

UK Banking Investigations Rise 16 Pct YOY

UK, banking, regulators, skilled persons’ reports, money laundering, white collar crimes, Financial Conduct Authority (FCA), Bank of England (BoE), news

Probes into financial institutions in the U.K. are up for the first time since 2015 due in part to an increase in both white-collar and money laundering crimes, the Financial Times reported Sunday (Dec. 15).

The latest data shows regulators have ordered 51 “skilled persons’ reports” in the 2018-19 financial year, a 16 percent increase over last year. Usually initiated by law or accountancy firms, the reports are ordered when the Financial Conduct Authority (FCA) or the Bank of England (BoE) are worried about some aspect of business.

The reports, also known as Section 166 reviews, “serve as an initial exploratory step and as such are typically kept confidential but can be used by the regulators to launch full enforcement investigations.”

A company that is under investigation has to pay for the probe — which can cost upwards of 100,000 pounds ($133,600) — regardless if any wrong-doing is discovered. Although the total reports ordered has declined since the height at 140 in 2010-11, recent figures show an uptick.

Accountancy firm Binder Dijker Otte, known as BDO, gathered the recent data and forecasts there will be more reviews on tap.

“Regulators have been increasingly using these reviews to crack down on companies where there is a higher risk of money laundering activities,” said Fiona Raistrick, a BDO partner. “Online trading firms have come under particular pressure from regulators in this area. The FCA has urged them to tighten transaction monitoring to help reduce their exposure to potential money laundering and fraud.”

Skilled persons’ reports made headlines following misconduct at Royal Bank of Scotland’s now-defunct restructuring division GRG.

Earlier this month, the BoE, the Prudential Regulation Authority (PRA) and the FCA published a shared policy summary on new requirements to strengthen operational resilience in the financial services sector. Regulators called on banks and payment firms to set “impact tolerances” for important services after numerous IT failures last year.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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