Digital Assets Report


Like this article?

Sign up to our free newsletter

Financial services firms need to consider compliance solutions in wake of FSA findings

Related Topics

Financial services firms that, according to a recent report, are not meeting sanctions or compliance criteria, should consider simple and cost-effi

Financial services firms that, according to a recent report, are not meeting sanctions or compliance criteria, should consider simple and cost-efficient ways to make sure they do come up to scratch, according to a compliance and technology expert.

Responding to a report recently published by the Financial Services Authorities’ (FSA) Financial Crime and Intelligence Division (FCID), which concluded that many firms were falling short of required standards, Karl Anderson, Managing Director of KYC360, stressed that firms must, and can, significantly improve their compliance knowledge and processes so as not to contravene UK and foreign sanctions regimes that are in force across the world.

In the Foreword to the FSA’s report entitled ‘Financial Services Firms’ Approach to UK Financial Sanctions’, published in April 2009, Philip Robinson, Director of the FCID, stated that some businesses, including some major firms, ‘have inappropriate systems for their business’, whilst there is ‘a widespread lack of awareness of the UK financial sanctions regime’ amongst smaller firms.

The report identified a spectrum of behaviours, including the failure to check HM Treasury sanctions lists at all, not screening names before providing services and unwarranted optimism in the assessment of the overall risk of sanctions breaches.  Whilst performance did vary between small, medium and large firms, the report concluded that there are inadequacies in systems and controls ‘in all size of firms across all financial sectors’.

Agreeing that few firms do have sufficient sanctions frameworks in place, Mr Anderson believes that checking sanctions lists can actually be a simple process and that there are tools, including the free online RiskScreen service from KYC360, that can help fill that gap. He said:

‘Firms are unnecessarily and often unknowingly exposing themselves to significant risks by not checking sanctions lists or placing undue reliance on flawed procedures and systems.’ he says. ‘Doing business with sanctioned entities can result in criminal and civil action, not to mention reputational damage.  

‘Firms are still finding it difficult to integrate and manage sanctions checking processes successfully, so in developing KYC360 we were conscious of the real need to build a comprehensive, easy-to-use and free online sanctions screening tool. Now that such tools are available, there is no need for firms to continue to put themselves at risk.’

KYC360 was launched earlier this year to become the world’s first free online anti-money laundering community. It offers free-to-use compliance and sanctions-checking tools Factbook Lite and RiskScreen, as well as optional premium content including due diligence research tool EDD360 and an expanded version of Factbook. In addition, the community element encourages professionals to discuss compliance issues and best practice in its forum.

‘The FSA report highlighted that firms really need to focus on their compliance infrastructure and how they undertake sanctions checks,’ adds Anderson. ‘There needs to be an industry-wide commitment to improving awareness of best practice in this area – something that KYC360 facilitates by engaging professionals in active debate.’

Since it was launched, KYC360 has grown rapidly to be used by more than 1,000 organisations from 70 countries and has the support of a number of leading industry bodies including the British Bankers Association, the Society of Trust & Estate Practitioners and the International Compliance Association.

Like this article? Sign up to our free newsletter

Most Popular

Further Reading