Tighten financial crime controls, FCA tells challengers

A review by the UK’s Financial Conduct Authority (FCA) has found that some challenger banks in the country need to improve how they assess financial crime risk.

The FCA conducted the review of challenger banks over 2021

The regulator conducted the review over 2021, finding that some challenger banks did not have financial crime risk assessments in place for their customers.

The review also identified a growing number of suspicious activity reports reported by challengers, which the regulator says raises questions around the adequacy of checks when onboarding new customers.

The FCA’s executive director for markets Sarah Pritchard says: “Challenger banks are an important part of the UK’s retail banking offering. However, there cannot be a trade-off between quick and easy account opening and robust financial crime controls.

“Challenger banks should consider the findings of this review and continue enhancing their own financial crime systems to prevent harm.”

The review focused on relatively new challenger banks which offer quick and simple application processes, including six retail banks with eight million customers between them.

However, the FCA says there was some good news in the report, highlighting the innovative use of technology to identify and verify customers at speed.

In March, the FCA warned operators of crypto ATMs in the country to “shut their machines down or face enforcement action”.