On 3 October 2018, the FCA published the findings of their long-awaited AML Thematic Review into the e-money sector.
Brief overview of the report:
- The FCA visited 13 e-money firms representative of the sector and for each conducted a pre-visit document review followed by an on-site review including interviews, systems walk-throughs and file reviews.
- The thematic report does not identify (like previous reports have done) an overall ML/TF risk associated with the e-money sector, such as ‘medium’ or ‘low’. Instead, it describes the state of compliance and gives examples of good and poor practice.
- Overall, the FCA encountered very few instances of poor practice and many instances of full compliance with the relevant obligations. This would support a finding of low risk, although this conclusion is not explicitly drawn.
- The executive summary states that firms generally have a positive culture, good understanding of their obligations and a low risk appetite with few high-risk customers. This effectively identifies the sector as a sector of low-risk business.
- Areas in which poor practice was detected (usually as an exception from the norm) relate to a lack of recording of steps taken, discrepancies between generic policies and actual practice and an incomplete implementation of controls across the firm.
- Perhaps the most important area of poor practice was risk management, where the FCA expected to see all customers covered by a risk assessment, which was not always the case.
- In summary, this is a very positive report that credits e-money firms with a good compliance culture and should help dispel the image of the e-money sector as a sector of high-risk business. It details some instances of poor practice, none of which, however, are significant.
The full report can be accessed from the FCA website