The U.K. financial services industry needs to focus more on customer ID procedures and document retention standards contained in the Joint Money Laundering Steering Group guidance notes, according to an official at PricewaterhouseCoopers in London. Andrew Clark, partner at the international accountancy firm, said that he knew of the two areas needing improvement after speaking to a range of clients recently.
Clark said although many firms are now putting in place the new principles-based JMLSG guidance, there is now a need to be able to show they are doing this and that it stands up to scrutiny from the Financial Services Authority. He said firms should be able to document the reasons why a decision is made, and the logic behind that decision. A firm that decides to put in place its own safeguards rather than the JMLSG guidance, which is not legally binding, must be prepared to explain why and detail how its internal procedures work to regulators, he added.
The FSA expects the highest standards and although it does not try and catch people out, those that do not aim for such high standards can expect a hard time from the U.K. regulator, Clark said. Eleanor Hughes, spokeswoman at the FSA, said the FSA is interested in how firms are taking into account the JMLSG guidance. Hughes said that although not legally-binding, the FSA is encouraging firms to adopt a risk-based approach because it is seen as an effective way to tackle money laundering.
The JMLSG guidance on anti-money laundering and terrorist financing was published earlier in the year after an industry-wide consultation and three-month feedback process which originally began back in March 2005 (CR, 1/30). Setting out senior management responsibilities and ongoing training of relevant staff has already been singled out as a crucial aspect of new guidance by industry lawyers (CR, 3/27, 5/1). Industry officials also say U.K. firms and banks are increasingly turning to vendors to help them meet the know-your-customer demands of the guidance (CR, 5/1).