FSA Calls for Stricter Measures against Money Laundering

31 July 2001
Britain's Financial Services Authority, as part of its newly released "Money Laundering Theme: Tackling Our New Responsibilities" report, is warning that firms involved in the financial services industry need to do more to prevent and protect against money laundering.

In the report, the FSA identifies six "clusters" of activities deemed particularly vulnerable to money laundering, and spread betting is one of the activities. The other five are international banking and high-risk jurisdictions, domestic banking, Independent Financial Advisers (IFAs) and offshore funds, online stockbroking and credit unions. According to the FSA, spread betting is vulnerable because "this sector provides an alternative channel for money laundering. A lack of awareness increases this sector's vulnerability."

"We intend to focus our regulatory attention mainly on these higher risk clusters," explained FSA Major Financial Groups Division Director Oliver Page. "Prevention is better than cure. Wherever necessary, we want to help these sectors improve their money laundering controls."

Page added, "We will support this through communication, raising awareness and through supporting the training of staff and management in the firms concerned. We set out the regulatory tools we intend to use with each of these clusters which will include consumer alerts, helping train the industry, inspection of firms by specialist FSA teams and enforcement action where necessary."

Research for the Money Laundering Themes report is based on information gathered from various sources, including an independent survey of financial firms; supervisory visits and meetings with representatives from sample firms; the findings of the FSA's Abacha investigation; National Criminal Intelligence Service data; a survey of law enforcement authorities; and consultation with industry bodies and trade associations.

The aim of the report is to assess current levels of industry compliance. In addition, the group, which is an independent non-governmental body that exercises statutory powers under the Financial Services Act 1986, the Banking Act 1987 and other legislation, needed to identify which financial activities are most at risk of money laundering. Through the report, the FSA also explains how it will handle its new responsibilities and allocate regulatory resources.

The FSA, which is the principal regulator of the U.K. financial services industry, has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence, promoting public understanding of the financial system, the protection of consumers and fighting financial crime.

The "Money Laundering Theme: Tackling Our New Responsibilities" report can be accessed online at http://www.fsa.gov.uk/pubs/other/money_laundering.pdf.