The UK’s Financial Conduct Authority has highlighted the role of the so-called First Line of Defence – bank employees who are involved in creating/selling products and services, or provide operational support for customers, products, and services – in detecting and fighting financial crime.
Sarah Pritchard, who addressed delegates at the Financial Crime Summit in London today, said those working in these roles “will be the first ones that spot how criminals are changing through unusual transactions, or to detect new trends through reports from customers.”
She also spoke about the importance of leveraging technology to its full potential when creating systems designed to spot financial crime.
“My message to all firms is this: embed your financial crime checks in your systems from day one, but keep evolving as the threats evolve. Use the power of data and tech, and stay alert for situations in which you may need to recalibrate your defences and alerts,” She said.
The FCA is working with the Payment Systems Regulator (PSR) and others to “understand the tech solutions that could help prevent APP [Authorised Push Payment] fraud in real time.” The partnership will involve testing how financial services and other sectors can share data and analytics in real time and spot fraud at the source.
The FCA will also be looking into how effective professional body supervisors (bodies such as the Institute of Chartered Accountants) are in preventing money laundering. The regulator is currently consulting on expanded guidance on the matter via OPBAS (Office for Professional Body Anti-Money Laundering Supervision), which is housed inside the FCA.
Pritchard also warned that firms should expect an increase in criminal activity as a direct outcome of the cost-of-living crisis. “As you all sit here today, have you asked what your firm is doing to calibrate your financial crime controls to changing risks in the cost of living crisis? How are your firm’s customers likely to be impacted, and is your firm doing enough to raise their awareness of crimes such as APP fraud, pension scams and ghost broking so they are not easily exploited?”
You can read the full speech here.