Managing money laundering risks: six proactive steps for wealth managers and private banks | Deloitte UK has been saved
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With the publication of the National Risk Assessment of Money Laundering and Terrorist Financing, regulatory scrutiny of wealth managers and private banks is likely to continue to increase. However there are steps firms, particularly those with global operations, can take now to be in a better position should the Financial Conduct Authority undertake a review of your business.
The latest National Risk Assessment of Money Laundering and Terrorist Financing was published by H.M. Treasury and the Home Office in December 2020. As in the 2015 and 2017 National Risk Assessments, wealth managers and private banks have been assessed as being at high risk of being used for money laundering and in particular of laundering the proceeds of corruption and tax evasion. These risks are heightened for firms that have global operations and high numbers of politically exposed persons (PEPs) in their client base. Family offices have been specifically identified as a means of infiltrating these sectors.
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as amended by The Money Laundering and Terrorist Financing (Amendment) Regulations 2019, and the Joint Money Laundering Steering Group’s Guidance set out a number of measures that firms should take to manage their exposure to laundering the proceeds of corruption and tax evasion. We have identified a number of these that are particularly relevant to firms dealing with PEPs and family offices which, while not new, are worth re-iterating:
The FCA and other European regulators have already undertaken enforcement action against some private banks for money laundering failings. It is our expectation that their focus on the wealth management and private banking sector will continue to increase. Taking proactive steps now to manage money laundering risks can put you in a good position should the FCA undertake a review at your firm.
Stephen is an experienced Director in our financial crime practice, with a successful record in various operational and strategic roles. He is an accredited PRINCE2 (2009) Practitioner and an associate member of the Association of Certified Fraud Examiners. Stephen started his career in financial services, managing fraud investigations teams and driving fraud strategies to protect the delivery of online and mobile banking services. Since joining Deloitte in 2012, he has combined a detailed understanding of business processes and drivers with an in-depth knowledge of the fraud and financial crime threats and challenges facing organisations. He has undertaken programme implementation and leadership roles within large scale transformation programmes and conducted independent risk assessments and reviews, helping clients understand and address their specific challenges. He is passionate about driving improvement in organisations’ understanding of complex issues regarding financial crime, fraud and the impact on businesses and consumers.