Skilled Person Review of historic onboarding practices and current Financial Crime framework
Our client was a UK-based international payments business.
The Firm had been in discussions with the FCA over the historic design and operational effectiveness of its Financial Crime framework relating to the onboarding due diligence and ongoing monitoring of client relationships. The origin of this was historical clients of the Firm that had been found to be operating unethically elsewhere in the market.
The FCA commissioned a Skilled Person Review to look at:
• Part 1 – The Financial Crime framework that the Firm had in place during the lifecycle of specific clients and how this had been operating;
• Part 2 – The Firms current Financial Crime framework.
In undertaking the Phase 1 review our team initially evaluated the design and operating effectiveness of the clients Financial Crime framework that was in place at time of the onboarding of the clients in question – this included consideration of Governance arrangements. We also evaluated the actual client onboarding of the end-customers itself (KYC/AML/CRA/CDD/EDD.
We then evaluated the ongoing activities undertaken during the lifetime of the client relationship including: Periodic Reviews and Investigations; Screening; Transaction Monitoring; General management of the relationships.
Finally, we evaluated the offboarding of the clients including any Adverse Media and how it was responded to and factored in.
As part of this phase we needed to map out and take into consideration key regulations over an 8-year period including: Money Laundering Regulations; Electronic Money Regulations; Payment Services Regulations.
In Phase 2 we undertook a review of the end-to-end Financial Crime framework including: Governance; roles and responsibilities; skills and capabilities; policies and procedures; risk assessment; compliance monitoring; due diligence processes; screening processes; and training and awareness. By this stage the Firm had been through a 9-month remediation process led by their Head of Compliance and so part of our work also included evaluation of these changes.
Our reviews identified a number of key areas of enhancement that the firm needed to make in order to fulfil the regulatory standards. The Phase 1 report in particular identified a number of historic areas where the Firm should have been more robust, and the Firm leadership acknowledged there had been gaps.
Our Phase 2 report identified and acknowledged that the Firm had made significant progress. As part of this we identified some recommendations that, if implemented robustly, would enable it to enhance the overall sustainability of the Financial Crime Framework.
The Leadership team acknowledged that the Skilled Person process had provided opportunities for learning and reflection and that they were now better positioned to maintain oversight and provide challenge to the Business.
