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UK banks fall down on trade finance risk

Posted at July 1, 2013 | Categories : News

UK banks face new sanctions from the Financial Conduct Authority (FCA) if they fail to demonstrate adequate safeguards over trade finance arrangements.

Trade finance is internationally recognised as high risk when it come to financial crime and according to the FCA, the UK’s position as a major financial centre could be severely impacted if banks don’t have appropriate systems and controls in place.

The review covered 17 UK banks and weaknesses were identified as follows:

1. Having no clear policy or procedures documents for dealing with trade-based money laundering risks thus failing to identify potentially suspicious transactions.

2. Most banks produced little or no management information on financial crime risks in the trade finance business.

3. Many had not developed specific training on the risks of crime relating to finance relevant staff. As a result, evidence was found of staff failing either to make appropriate enquiries about financial crime risks or to escalate potentially suspicious transactions.

The FCA’s director of enforcement and financial crime, Tracey Dermott, comments: “Financial institutions need to take this responsibility seriously and we will do whatever is necessary to ensure they do.

“We are considering whether further regulatory action may be required in relation to certain banks in the review.”