Policy Statement PS21/4 summarises the FCA’s proposals to increase the number of firms (by circa 4500) who need to submit the annual financial crime report, which they refer to as ‘REP-CRIM’, based on its assessment and understanding of their business activities and potential money laundering risks.
The REP-CRIM return provides the FCA with a range on indicators on firms’ financial crime risks, such as:
- high risk jurisdictions and customers, including politically exposed persons (PEPs)
- numbers of suspicious activity reports
- sanctions screening
- views on the most prevalent frauds.
Which firms are affected?
Firms who will be required to complete the report include:
- Certain FSMA authorised firms falling within the scope of the Money Laundering Regulations 2017 which either (i) hold client money or assets; or (ii) carry out an activity that the FCA considers poses a higher money laundering risk (e.g. dealings in investments as agents and managing investments – see full list below*)
- Most payment institutions.
- All electronic money institutions.
- All multi-lateral trading facilities.
- All organised trading facilities.
- All cryptoasset exchange providers and custodian wallet providers.
* Specifically firms conducting the following activities, regardless of turnover, will have to submit the report.
- advising on investments, where the firm holds client money or assets during the relevant financial year
- arranging (bringing about) deals in investments, where the firm holds client money or assets during the relevant financial year
- dealing in investments as agent or as principal
- assisting in the administration and performance of a contract of insurance in relation to non-investment insurance contracts
- managing investments
- establishing, operating or winding up a collective investment scheme
- establishing, operating or winding up a personal pension scheme or stakeholder pension scheme
- managing a UK UCITS, or an AIF
- safeguarding and administering investments
- acting as trustee or depositary of a UK UCITS or an AIF
- operating a multilateral trading facility or an organised trading facility.
Firms with reported total revenue of more than £5 million at their last accounting reference date, that conduct the following activities, also have to submit the report.
- advising on investments
- arranging (bringing about) deals in investments
- advising on pension transfers and pension opt-outs
There is no change to REP-CRIM requirements for firms already in scope. However, the FCA has now removed home finance mediation firms from the REP-CRIM reporting obligation and confirmed that general insurance firms/intermediaries and authorised professional firms will not be required to complete the REP-CRIM, on the basis that neither is within scope of the MLRs.
When is the report required?
For those being brought within scope, the new rules come into force on 30 March 2022 and each firm must submit their REP-CRIM within 60 days of their first Accounting Referencing Date. So, firms with a 31st March year end will be the first in the extended group to submit the report.
Can you access the required data?
The report is completed on RegData (formerly Gabriel). You can link to the report here.
Firms would be prudent to review to required data now to ensure that they are collecting and recording the data that they will have to report. Required information includes:
- number of clients who are politically exposed persons
- number of other high-risk customers
- number of customers in various geographic regions
- number of customers refused or exited on financial crime grounds
- number of suspicious activity reports made in the period