One of the UK’s major regulators has warned challenging banks to stop cutting corners in the fight against financial crime so customers can open accounts quickly and easily.
Sarah Pritchard, head of the city’s regulatory market sector, said there could be no “trade-off” between attracting customers and the checks that every bank needs to do.
The Financial Conduct Authority (FCA) has found that many challenging banks are not doing enough to combat financial crime.
Some banks didn’t even have a so-called customer risk assessment system.
Valuation is an important way for banks to understand their customers and manage the risk of money laundering.
This is a legal requirement for companies subject to UK money laundering regulations.
“Without customer risk assessment, companies cannot guarantee that due diligence measures and ongoing monitoring are effective and proportional to the risks posed by individual customers,” FCA said.
Pritchard said it is important to prevent financial crimes to show that Britain is a safe place for people and businesses.
“Challenger Bank is an important part of UK retail banking services,” she said.
“But there can be no trade-off between quick and easy account opening and strong financial crime management.
“Challenger Bank needs to review the results of this review and continue to strengthen its own financial crime system to prevent harm.”
Since its emergence after the financial crisis, challenging banks have participated in established competition and attracted millions of customers from traditional bank homes.
The FCA found that some high-risk customers were slipping through the net, and banks discovered that they were already customers for some time.
“Our findings showed that these customers shouldn’t have been onboarded, and that better management and risk assessments may have identified them earlier,” it said. ..
An increasing number of reports are being sent by Challenger Bank to authorities when customers do something suspicious.
However, the quality of these reports can be poor. Some reports simply list the transactions without explaining the suspicious reason.