FCA urges firms to ‘embed financial crime checks’
Financial Conduct Authority (FCA) executive director of markets Sarah Pritchard has called on the financial industries to ‘embed’ the use of data and technology to ward off financial crime.
Speaking at the Financial Crime Summit in London today (7 September), Pritchard warned that financial crime would worsen in light of the cost-of-living crisis and advised firms to plan how they will respond to the increased risks.
“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,” she said. “Use the power of data and tech, and stay alert for situations in which you may need to recalibrate your defences and alerts.”
Read more: FCA blocks a quarter of firms from consumer investments market
She dubbed firms the “first line of defence” against financial crime, adding, “you are the first responders and front line in the fight against financial criminals, and together we can limit their spread.”
Pointing to the regulator’s recent review of challenger banks, she said the risks there were found to be no different from in the retail sector, with system weaknesses open to exploitation.
She urged firms to be diligent about know your customer (KYC) processes, and to review alerts and ensure alerting systems were properly calibrated.
She said the regulator had also uncovered good examples of data, tech and geolocation data being used to verify customer identity quickly, and advanced monitoring for fraud by checking customers who were using multiple devices to log into accounts.
Read more: Finance firms failing to detect criminal “ghosts”
Turning to crypto, she talked of the need for “robust standards” on anti-money laundering measures.
“So far 37 firms have met these standards after following our guidance, but they will need to continue to meet those standards to keep their registration”, she said, but added that it is not just high-tech offerings that are at risk of exploitation.
Calling on the financial industries to embrace tech solutions to these threats, she said the regulator would be holding one of its regular techsprints later this month.
“Together with the Payment Systems Regulator and industry partners, we want to understand the tech solutions that could help prevent APP fraud in real time”, she said.
“We want to test how financial services and other sectors can share data and analytics in real time, and how to spot fraud at source.”
Calling on all stakeholders to play their part, including government, regulators and crime prevention agencies, she concluded: “Together we can have a bigger force multiplier effect that leaves consumers more secure and confident, boosting the health of the financial systems we all rely on and ready to face the next challenge.”
Read more: Open banking will ‘complement’ credit bureau data under Consumer Duty