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Money Transfer Businesses – Don’t ignore the FCA!

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If you run a Money Transfer Business (an MTB) which provides Money Transfer Services, you’ll already know that it’s a regulated activity within the scope of the Financial Conduct Authority, the FCA. You’ll understand the obligations that relationship creates.

The FCA may be busy, but that doesn’t mean compliance can be overlooked

Even if your business is small you’ll know about the requirements of due diligence. You’ll understand the need to check customer details as part of the Know Your Customer (KYC) regime. You’ll know about transaction monitoring and you’ll be aware that the FCA can fine you – or even close your business down – for failing to meet compliance standards.

You might also have picked up in the news media that the FCA is under-resourced, and is unable to keep up with the demands of policing an ever-expanding financial services sector. Don’t believe it for one moment. True, the FCA may be underfunded for the magnitude of the tasks they face, but don’t think they lack teeth and do not for one moment think they won’t come calling if they think there is cause to do so.

There’s plenty of evidence that the FCA will find businesses which fail to comply

If you doubt this, simply run a quick search online for FCA fines 2024. Much of what you’ll find is unrelated MTBs, but go a little further and search on their website for money transfer. Now the picture becomes clearer. This is an area in which the FCA is very active and you’ll see why: MTBs are especially vulnerable to abuse by money launderers, who often work at a large scale and with sophisticated scams.

Money laundering is a serious problem globally, and the UK is not exempt. In particular, its large financial services industry makes it appealing to those involved in financial crime. The UK National Crime Agency estimates that the amount of money laundered in the country each year could be between £36 billion and £90 billion.

The point here is that even an apparently well-run business can become a victim of money laundering. The FCA explains how in a useful document entitled Money Transfer Scams. You can also find their stern looking letter template with the heading,  Action needed in response to common control failings identified in anti-money laundering frameworks. Despite the daunting title it’s useful reading.

Defeating the money launderers

MTBs face a dual challenge ensuring compliance. You don’t want to be used and abused by criminals, and you don’t want the FCA to find fault with your financial compliance procedures.

Given the complexity of meeting regulatory requirements it makes sense to buy into a third party specialist service that can deliver the services you need. In particular, this will be initial checks (KYC) and ongoing surveillance via transaction monitoring. All of which needs to be automated. To stay up to date, there are more elements to consider. The essential benefits to look for are

  • thorough customer screening with up to date enquiries for anti-money laundering and anti-terrorism funding
  • checks against sanctions lists and for Politically Exposed Persons
  • in-depth ID verification, including alerts for stolen or re-sold documents
  • transaction monitoring to build up accurate pictures of typical behaviours – and thus suspicious ones
  • a customisable rules engine, so you can fine-tune levels of scrutiny to match areas and levels of risk and
  • scalability, so growing your business is easy.

There are many compliance services on the market. But there are relatively few who can offer all of the above at cost-effective prices. It pays to do your research and find one who does.


By Declan Morton, staff writer at Essiell Compli, a leading provider of anti-money laundering and counter-terrorist financing compliance solutions.

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