Enforcement

The FCA also adopts a ‘risk-based’ approach to enforcement, in line with its approach to supervision.

It considers the nature and seriousness of any suspected breach of the Money Laundering Regulations before deciding on the appropriate action to take.

Failures in anti-money laundering controls will not automatically result in disciplinary sanctions, although enforcement action is more likely where a firm has not taken adequate steps to identify its money laundering risks, not put in place appropriate controls to mitigate those risks or failed to take steps to ensure that controls are being effectively implemented.

The regulators can use a range of investigation and enforcement tools when investigating suspected failures in the anti-money laundering controls of registered businesses, including:

• Information requirements:It may require information by serving written notices on a registered business or any person connected to a registered business.
• Interviews:It may require individuals working at, or connected to, a registered business to attend an interview and answer questions.
• Search warrants: It may apply to the court for a search warrant, allowing a police constable to enter and search premises and to take possession of documents.

Enforcement

The third EU Money Laundering Directive requires supervisors to have the power to impose effective, proportionate and dissuasive sanctions for non-compliance with the Regulations.

The regulators are able to:

• Levy penalties.
• Prosecute an officer of a registered business.

Conviction may result in imprisonment for up to two years, a fine or both.

Note that the Financial Conduct Authority (FCA) has the power to publish details of investigations as well as enforcement action. This presents an even more compelling argument for firms to take notice of financial crime legislation and make sure systems and controls are in place.