Dear CEO: Our Custody and Fund Services Supervision Strategy Letter
MoreCall: 0845 139 4444
Email: hello@square4.com
Call: 0845 139 4444
Email: hello@square4.com
Prevention of financial crime will be a constant challenge for most firms, with constantly changing criminal activity driving the need for continuous improvement in systems and controls.
It’s a topic that is always high on the regulatory agenda and all regulated firms need to make sure that they have effective controls to detect and prevent financial crime.
Service Overview
Obligations are underpinned by various legislative and regulatory requirements including the Money Laundering Regulations 2017, the Proceeds of Crime Act 2002, the Terrorism Act 2000 and the Market Abuse Regulations. In addition to that, the FCA Handbook includes guidance for firms on what’s expected from them to ensure effective financial crime risk management and the JMLSG Guidance Notes offer specific guidance on anti-money laundering controls. But most importantly, firms need to protect customers from harm and protect their own businesses from the losses that could arise when financial crime controls fail.
Managing the risk around this ever growing and evolving issue is a constant challenge for firms and getting it wrong can result in declining revenues, customer dissatisfaction and reputational damage, not to mention financial penalties, regulatory intervention and the risk of facilitating serious and organised crime.
Service Benefits
How Square 4 can help
We have a wealth of knowledge and experience that can help you manage financial crime risk in your business. Our focus is on supporting a risk based approach, making sure you’re able to effectively identify the financial crime risks faced by your business and implement the right controls to manage that risk.
We have experience of carrying out financial crime reviews including financial crime heath checks and regulatory-driven reviews. We have experience of supporting firms to develop financial crime and market abuse risk assessments; designing effective processes and controls for assessing and addressing client risk through customer due diligence; and implemented transaction monitoring processes and controls. We have also supported firms in getting their governance arrangements in the right place to drive good financial crime compliance, through delivery of training, supporting the implementation of staff vetting and developing effective management information packs and committee structures.
Our goal is to support you in achieving high standards of financial crime compliance whilst equipping your team with the skills and knowledge needed to maintain those standards going forward.
Health check reviews
We can carry out a review of your financial crime prevention control framework to assess whether it is compliant with the regulatory and legislative requirements as well as meeting regulator expectations and industry standards. You will receive a report of our findings including any recommendations for improvements that should be made.
Business wide financial crime risk assessment
One of the most important parts of a firm’s financial crime prevention strategy is the business wide risk assessment. This drives a methodical approach to risk detection, which in turn can help firms ensure the right controls are in place to address the risks faced. We can help you carry out a thorough business wide risk assessment, considering all types of financial crime risk that could be faced by your business.
Customer risk assessment process
The key to applying appropriate customer due diligence controls is having a clear methodology for assessing the financial crime risk that each customer presents. This will help you to be sure that you’re applying the right type of customer due diligence controls and ongoing monitoring to manage the risk posed. We can help you to design and document a risk assessment methodology that takes account of the nature of your client base and the type of business you do
Control design and documentation
We can help you to design and document the controls within your financial crime control framework. This might involve designing and documenting customer due diligence processes, sanctions checking arrangement, ongoing monitoring controls or it could focus on controls for oversight of third parties you place reliance on. The controls designed will be appropriate to the risks faced by your business and we’ll document them in a way that is clear and easy to understand.
Governance arrangements
We can help you to maintain or improve the governance arrangements that underpin your financial crime compliance culture. This could involve providing training to your senior management or wider team members; developing management information packs that give useful insights into the effectiveness of the financial crime compliance arrangements in place within the business; advising on Board and committee arrangements; helping to define roles and responsibilities relevant to financial crime compliance; or advising on controls for staff vetting.
Q: We want to set up a new business line, can you help us to assess the Financial Crime exposure and potential implications?
A: Yes. We often help firms carry out business wide risk assessments to identify all financial crime risks a new or existing business is subject to. We can work with you to understand the new offering, identify the risks that it will bring to your business and help you to develop your risk assessment and control framework to take account of those risks.
Q: We want to upskill our team, so that we’re less reliant on external resource going forward, can you help with that?
A: Our long-term goal with any of our Financial Crime work is to make sure that your teams are put in a position where they can identify suspicious activity or transactions and where they can own and run processes themselves. We will always aim to equip your team for success going forward whilst providing a helping hand whenever needed in the background.
Sign up to our Insights