The U.K. Financial Conduct Authority (FCA) regulator is urging banks to exercise “judgment and common sense” when cutting categories of customers from their services that are more likely to engage in anti-money laundering activity, says FCA. The regulator is calling for banks to rethink their derisking strategies as this move may trigger consumer protection or competition issues.
The regulator said that money transfer services, charities and FinTech companies are among the sectors that are affected by the bank’s move to shy away from providing services.
FCA is recommending that financial institutions roll out and maintain effective policies that identify, assess and manage money-laundering risk. “These policies and procedures must be comprehensive and proportionate to the nature, scale, and complexity of the bank’s activities,” FCA says.
The authority released its statement on “derisking strategies” alongside updates to its guidance on financial crime systems and controls.
The U.K. Treasury said in March that it would consult on new regulations for AML compliance for digital currency exchanges in Britain to “support innovation and prevent criminal use.”
Last year, the U.S. Treasury Department’s Financial Crimes Enforcement Network called on banks to rethink their approach to axing accounts of money services business amid transparency concerns. The Treasury Department also warned that banks should not turn away from the businesses because authorities could have a harder time tracking and monitoring the movement of money.