Skilled Person quality assurance review of a consumer investments firm under a VREQ
Our client, a Consumer Investments Firm, had undertaken a significant programme of remediation on its Financial Crime framework by way of response to an FCA Feedback Letter. The FCA had established a VREQ over the onboarding of new clients whilst these changes were being made.
The FCA required assurance over the application of the Firms updated policies, procedures and Customer Risk Assessment (CRA) in particular with relation to customer onboarding. Part of the driver for this was that the Firms target clients included those with perceived higher risk through a combination of jurisdiction and nature of business (i.e. Digital Assets Firms). Hence the FCA commissioned a Skilled Person review to evaluate the operational effectiveness of the onboarding processes for new clients.
Whilst the Firm was focussing on identification of a pipeline of new clients, our Financial Crime team evaluated the Financial Crime and Onboarding Policies and procedures of the Firm against regulatory and good practice expectations to ensure they were robust. Where there were areas for enhancement we provided feedback. In addition we evaluated the Firms updated CRA including verification of whether the Firm had identified all relevant risk factors and had applied fit for purpose weightings.
The FCA varied the VREQ to allow onboarding with us, the Skilled Person, as a QA check/gate in the process. Under this, each time the Firm had assembled the relevant AML/KYC paperwork for a new client, we undertook an independent review and reported back outlining as to whether the Firm had met its own internal CDD/EDD policies and procedures, as well as the UK regulatory requirements and industry guidance. A number of these clients were Digital Assets businesses in the Crypto market and hence we needed to bring our expertise to bear as part of evaluating the files.
This continued for a series of client files over a six month period.
We provided the Firm with real-time feedback on their policies and procedures so they could make timely enhancements during the engagement.
Working with the Firm and the FCA we were able to provide assurance of the quality of the onboarding files the Firm had prepared. The VREQ was lifted on an expedient basis and the Firm has now resumed normal onboarding.
