Skilled Person Review and transformation of a payment firms Financial Crime systems and controls

Our client was a global online payments business and authorised Electronic Money Institution (EMI) who operated primarily through a series of merchants.

As part of an application to the Real-Time Gross Settlement (RTGS) the FCA assessed the Firm’s safeguarding controls, AML/CTF controls, governance and oversight arrangements and IT controls. The result of this was a concern by the FCA that the Firm may be in breach of several conditions of its authorisation.

As a consequence, the FCA instructed the Firm to commission a Skilled Person review (s166) and placed Voluntary Requirement (VREQ) restrictions on the firm with an agreement to cease any new onboarding.

The focus of our review was the Firms compliance with the Electronic Money Regulations with respect to:

• Governance, Risk Management and oversight arrangements (including a concern over the jurisdictional spread of key stakeholders);
• Anti-Money Laundering & Counter Terrorist Financing systems and controls.

The governance work utilised detailed interviews with key stakeholders, live observation of Board and governance committee meetings; evaluation of the skills and competencies the Firm had in place; and gaining an understanding of the way they ‘operated’ (formality, decision making, etc).

The FC elements utilised our tried and tested methodology for Skilled Person reviews evaluating all areas of scope and supplementing this with operational effectiveness testing.
We worked closely with the Firm, and although there were a range of recommendations around a need for improved governance structures; committee management; skills and experience in key roles; and FC policies and procedure, the report was well received and the Firm committed to a programme of remediation.

We conducted a follow up review around 9-12 months after our initial review. In this review we were able to assess that 95% of the original recommendations had been fully remediated and the ones that were still outstanding had been actioned but required a little further embedding.

The FCA were comfortable with the Firms progress and removed the VREQ and allowed the Firm to exit the Skilled Person process.