The reporting requirement will apply to all firms subject to existing money laundering regulations (MLRs) with revenue of more than £5m (€5.9m, $6.61m) including advisers, life companies and retail intermediary services.
Disclosures
The form asks firms to provide information about the location of their customers, the number of suspicious activity reports a firm files with the authorities and the jurisdictions that the firm has business in that it considers pose a high risk.
Respondents must also explain the resources it allocates to tackling financial crime, any sanctions and freezes and the firm’s general views on which are the most prevalent types of fraud.
The FCA estimates 1,400 firms will have to file the returns and they have 60 days from their year-end to do so, which was increased from 30 days after an initial consultation in December 2015.
Advisers, life insurers and investment firms with revenue below the £5m threshold will be exempt from filing the return, with the first reports due in March 2017.
Compiling data
According to a policy statement on its website, the FCA said the data collected from the reports will give the regulator a better insight on risks and trends in financial crime.
“At present, our financial crime supervisory work relies on the use of ad hoc data requests to gather information about firms’ systems and controls.
“We do not currently routinely gather information from firms about financial crime, the risks they are exposed to, or how they manage those risks. This affects our ability to operate a truly risk-sensitive supervisory approach in line with global standards,” said the watchdog.
The FCA said increased reporting will stop it from visiting low-risk firms, which it calls an “unnecessary burden” for the firms and an “inefficient use” of its resources.
“A more efficient risk-based approach will allow us to better fulfil our statutory duties, particularly for money laundering, and will demonstrate an approach that is transparent and can be easily understood by industry and others,” it added.
The watchdog also revealed that compliance costs of introducing the new system could be as high as £85,000 for individual firms followed by annual costs of up to £12,000.
It estimates that overall implementation costs for grouped firms could range between £900,000 and £1m with low annual costs.
“At present, our financial crime supervisory work relies on the use of ad hoc data requests to gather information about firms’ systems and controls."
