Alex Barnes, Insurance Partner looks at the key regulatory issues in relation to tackling financial crime.
Having worked in the industry for over 15 years, it is hard to remember a time when we weren’t subject to regulation, but the last few year’s regulation seems to have reached new heights! Perhaps it is a reflection of the world we live in.
With the FCA becoming more active and involved than ever before, gone are the days when ticking boxes was sufficient to meet requirements. Saying you comply is not enough – you need to demonstrate and prove that you do or you may be subject to enforcement action.
One of the latest hot topics on the FCA agenda is financial crime. I’m sure we’ve all gone through internal training and procedures to make sure we are aware of the issues and how to deal with them. With the increasing scrutiny on the prevention of financial crime, are we giving it adequate attention?
"Of course we are!" I hear you say. However, a thematic review by the FCA (TR14/17)
in November last year found that most intermediaries didn’t adequately manage the risk that they might be involved in bribery or corruption. I’m sure we all think we have the correct processes in place, but are they comprehensive enough?
It’s not something you can delegate – understanding needs to start at the top and work down. Not least because the senior management team, including the board, are responsible for putting it into practice. Senior management’s responsibility is not a small one and they need to be aware of the risks, ensure the firm has the appropriate systems and controls in place, take appropriate measures, facilitate detection and monitor incidence, to name but a few.
This is no mean feat. Such a complex matter involves a plethora of legislation, reports and documentation. "Can’t see the wood for the trees" is a very apt expression here!
To help bring clarity to the situation we have produced a whitepaper highlighting the key roles and responsibilities, together with the most important steps insurance organisations should take for compliance. Click here to download our whitepaper
Some of my highlights from the whitepaper are:
- Policies and procedures – ‘Knowing your customer’. We all think we know our customers but is the information up to date - chances are we need both a greater understanding and greater evidence of understanding.
- Addressing hotspots – knowing the areas the FCA is focusing on is useful as it will help you focus your resources and prioritise.
- Key questions for executives and senior managers – six key things you should ask about your organisation.
My advice is don’t be complacent and think strategically. Reviewing your policies and procedures isn’t enough you must monitor and measure their effectiveness. This is not a one-off action, it needs to be a consistent ongoing process.
This time it is personal! Not only is your organisation responsible but senior management individuals are responsible too. I will leave you with another well-known saying: prevention is better than cure and, just to emphasise the potential severity, below are some of the fines that have been charged. So don’t take the risk – prevent financial crime.