The financial services sector needs to come together to fight the scourge of finanical crime which the Financial Conduct Authority expects to become even more prevalent amid a cost of living crisis.
This is according to Sarah Pritchard, the FCA’s executive director, markets, (pictured) who was speaking at the Financial Crime Summit at County Hall in London earlier this week.
Even more prolific
Pritchard warned that the regulator expects financial crime to become “even more prolific” during the cost of living crisis.
“More than seven in ten people say they have been targeted by scams in the past three months as con artists try to exploit the cost of living,” she told delegates.
“We are asking firms to plan how they are going to respond to the risks of the cost of living crisis.
“We are already seeing more scams such as loan fee fraud, ghost broking, and false access to rebates from utility companies.
“And we anticipate a potential rise in people being recruited to act as money mules too, where they are asked to transfer money through their accounts by strangers in exchange for a payment.
“The temptation for people in difficult circumstances is huge. But so are the consequences. This is money laundering – criminals trying to move cash ill-gotten from modern slavery, drugs, fraud, terrorist financing and other crimes. It can be detected, and can result in prosecution and a red flag in financial records.”
Pritchard challenged delegates to ask what their firms doing to calibrate financial crime controls to changing risks in the cost of living crisis, to assess whether their firm’s customers are likely to be impacted, and if their firm is doing enough to raise their awareness of crimes such as APP fraud, pension scams and ghost broking.
Pritchard added that along with the Payment Systems Regulator and industry partners, the FCA wants to understand the tech solutions that could help prevent APP fraud in real time.
The regulator also wants to test how financial services and other sectors can share data and analytics in real time, and how to spot fraud at source, she revealed.
And the FCA has also reached into the legal and accountancy sector, through the Office for Professional Body AML Supervision (OPBAS) housed in the FCA.
The body is increasingly seeking to test how effective professional body supervisors are in the money laundering supervision of their sectors and is currently consulting on expanded guidance, in a consultation which closes later this month.
Partnerships hold the key
But Pritchard warned crime spotting cannot be left to just legal, compliance or other experts.
“Fighting crime should never be left to one body or one team within an organisation,” she added.
“It takes action and vigilance across all sectors in the UK, from the Home Office, to the NECC, the NCA, the Treasury, other regulators, internationally – through our networks, and most importantly through you, our partners in the private sector, the eyes and ears on the ground.
“It is that partnership between firms, regulators and government, that holds the key.
Bigger force multiplier
Consequently, Pritchard called on the sector to work together so that it can have a bigger force multiplier effect that leaves consumers more secure and confident, boosting the health of the financial systems so they are ready to face the next challenge.
“The best way of us getting ahead of this new wave of financial crime is through being alert and through joined up action and joined up intelligence,” she added.
“Whether you work in one of the 50,000 firms regulated by the FCA in the UK or are a member of a professional body that we oversee – an effective defence is needed…
“My message to all firms is this: embed your financial crime checks in your systems from day one, but keep evolving as the threats evolve. Use the power of data and tech, and stay alert for situations in which you may need to recalibrate your defences and alerts,” Pritchard concluded.