FCA Annual Financial Crime Reporting (REP-CRIM) support
Banks, building societies, companies engaged in MiFID activity, and companies dealing in cryptoassets are among the regulated firms that must submit REP-CRIM reports, or yearly financial crime reports, to the FCA (Financial Conduct Authority). Since 2016, numerous businesses have been required by SUP 16.23 to submit this report for financial crime compliance. Yet, an estimated 4,500 extra enterprises have entered the purview of REP-CRIM as a result of the regulator's most recent PS21/4 update.
The FCA uses REP-CRIM reports to analyse the efficacy of organisations' financial crime systems and controls as well as to spot trends and new threats. All businesses that are authorised under the Money Laundering Regulations (MLR) 2007 or Payment Services Regulations (PSR) 2007 are subject to the reporting requirement.
The annual financial crime compliance report must include information on:
• The nature and extent of the firm's exposure to financial crime risk, including money laundering, terrorist financing, and fraud.
• The effectiveness of the firm's systems and controls in managing financial crime risk, including the identification, assessment, and mitigation of risks.
• Any material changes to the firm's financial crime systems and controls during the reporting period, and the reasons for these changes.
• The number of suspicious activity reports (SARs) submitted to the National Crime Agency (NCA) during the reporting period.
• The number of internal and external reports of financial crime made during the reporting period.
• The level of training and awareness among the firm's staff on financial crime risks and controls.
• The amount spent by the firm on financial crime prevention during the reporting period.
The FCA needs information to better combat money laundering, and REP-CRIM returns are a crucial method to do so. However, firms have struggled with this financial crime compliance over the years, facing challenges such as lacking the required data, holding it or being unable to dissect data in a manner suitable for meeting REP-CRIM reporting requirements.
The FCA's level of comfort with returns like these will determine whether a firm's regulatory monitoring framework is made more or less onerous, depending on the sector it operates in.
Non-compliance with the FCA's financial crime reporting requirements may result in regulatory action, such as penalties and punishments if they are not rectified. It is crucial that businesses make sure they adhere to these financial crime compliance reporting obligations and include accurate and comprehensive information in their reports.
Who is affected?
As outlined in PS21/4, the following firms have had to submit an annual REP-CRIM return as of 30/03/2022:
• Certain FSMA authorised firms falling within the scope of the MLRs which either:
- hold client money or assets (i.e., are holding under FCA Handbook CASS 5, 6 or 7), or
- carry on an activity the FCA considers posing a higher money laundering risk. (For example, dealings in investments as agent and managing investments). These are set out in a table under 16.23 in Appendix 1 of PS21/4.
• All payments institutions, except for payment institutions that only carry on at least one of the following payment services:
- Money remittance (these firms are supervised by HMRC for anti-money laundering (AML) purposes);
- Account information services and/or payment initiation services. These firms do not receive or hold clients’ money and do not carry out payment transactions, and so pose a lower AML risk;
• All electronic money institutions.
• All Multilateral Trading Facilities (MTFs).
• All Organised Trading Facilities (OTFs).
• All cryptoasset exchange providers and custodian wallet providers.
How can we help you?
Thistle Initiatives has supported firms for over 10 years as a trusted financial crime compliance and regulatory advisor. In addition to assisting you as and when our team of specialists can serve as your right hand in a meeting and complying with regulations. We understand the importance of staying up-to-date, and compliant and are dedicated to providing the guidance and support needed.
If you are needing some support on submitting your REP-CRIM form or would like continued support via our retainer advisory service, please get in touch and our Financial Crime team can provide the right package to support your regulatory needs.
The two products we will be offering:
- Support to fill out the form itself (which will include time to support the client with internal data collection etc).
- Retainer advisory service to support for the period of time the client is preparing for / filling in the form (this will be a set number of hours that they can drill down on and use when needed throughout the process)
Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 0207 436 0630 or sending an email to info@thistleinitiatives.co.uk.