ICT Views

Setting the (double) standard?

by: (Financial Crime Compliance Course Director) on

So the UK Information Commissioner’s Office (ICO) has upheld the Financial Conduct Authority’s (FCA) decision to refuse to declare certain information under the Freedom of Information Act 2000, relating to countries the FCA deems to present a high money laundering risk.


The UK regulator argued that to disclose the information would, or would likely, be prejudicial to the relationship between these countries and the UK, which would ultimately have a negative impact on the effectiveness of the UK financial services regulatory regime.

worldmapThe FCA

So how could providing a list of countries really have a detrimental effect on the effectiveness of the UK regulatory regime?Well, according to the FCA, disclosure of the list would increase, amongst other things, ”public awareness and enhance the understanding of the FCA’s own regulatory and supervisory processes in relation to the UK’s interaction with, and assessment of, other countries in the fight against organised crime”. I will leave you to try and determine how one could interpret the UK Regulatory and supervisory process simply by looking at a list of countries deemed high risk from a money laundering perspective; without the benefit of the underlying methodology.

What information does the UK regulator have that is not already considered by the likes of the Financial Action Task Force and Transparency International etc. when considering country risk?

I am sure these countries are well aware of international opinion. Certainly the US makes no apology for naming and shaming under s.311 of the USA PATRIOT Act.

Anyway, surely financial institutions are entitled to transparency in the way they are supervised? 

And if the countries listed by the FCA really are such hotbeds of laundering that they cause significant concern above and beyond that already raised by the international standards setters, then is it not also in the public interest to publish this list so that financial institutions may react appropriately? After all, we are repeatedly told that money laundering undermines the fabric of society and facilitates organised criminality: if financial institutions are not privy to this information then how can they effectively mitigate their risk?

Of course, the FCA noted that there are a variety of publicly available sources of information about high-risk countries but that they don’t actually endorse any of it. Great!
So Big Bank, Bigger Bank and Huge Bank – assess your country risk using what you can scrape out of the public domain, but be aware. The regulator has its own standards, of which you are not informed, so don’t be surprised when you are told that you are getting it wrong but not why.

Implementing the risk-based approach is already difficult enough without the knowledge that your policies may well be benchmarked against criteria you have no hope of seeing. Some might suggest this is just a little unfair.

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Dawn said...
and further news..... HM Treasury has provided updated guidance on countries considered higher risk from a money laundering and terrorist financing perspective:


If the Treasury can do this then why not the FCA??
November 23, 2015 07:13


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