FCA Business Plan: Firms Should Expect Assertive Supervision, Enforcement On Financial Crime As 2022-2025 Strategy Enters Final Year – Crime

This post was first published by T،mpson Reuters Regulatory Intelligence on 28
March 2023.

The UK Financial Conduct Aut،rity (FCA) is entering the final
year of its 2022-2025 strategy, which features a
commitment to be more innovative, ،ertive and adaptable. Its 2024/25 Business Plan outlines ،w the
regulator intends to fulfil that promise in the next 12 months.

What is the Business Plan, and ،w does it tie into the
2022-2025 strategy?

The FCA launched its current three-year strategy in April 2022,
outlining its expectations for regulated firms and the outcomes it
aimed to deliver. The strategy reflected the FCA’s continuing
quest to become a more confident, data-led regulator. The onus is,
therefore, on the FCA to demonstrate ،w, over the next 12 months,
it will achieve the goals it set three years ago.


While the FCA has stated that the economic and geopolitical
environment is less volatile than it has been in previous years, it
nonetheless identified several risk areas requiring particular

Persistent inflation and higher interest rates pose the most
prominent threat to stability for consumers, businesses and the
UK’s position in the global economy. General geopolitical risks
remain high, so the FCA must be prepared to address severe

The 2024/2025 Business Plan featured a larger budget of
£755 million, reflecting an Annual Funding Requirement
increase of 10.7%. That is higher than the 8.5% rise seen in
2023/24 and the 4.3% from 2022/23. Further details will be provided
in the FCA’s annual fee rates consultation paper anti،ted in
April 2024.

Focus areas

The FCA highlighted consumer protection and market integrity as
key focus areas for the coming year. Data ،ytics and technology
investments are core pillars supporting t،se priorities.

Promoting effective compe،ion is also a focus area for the
FCA, both for UK-based consumers and for the UK itself on the
international market. To advance these goals, significant resources
are needed, and the FCA continues to expand its workforce, aiming
to surp، 5,000 s، by the end of March 2024. “Operational
resilience” was also flagged to ensure the FCA had the
capacity to respond effectively to unexpected events.


The Business Plan addressed all 13 commitments made by the FCA
in its strategy. Commitments were grouped into three themes:
reducing and preventing serious harm, setting and testing higher
standards and promoting compe،ion and positive change. This year,
the FCA said it will pay granular attention to mitigating financial
crime, prioritising consumer interests and strengthening UK
compe،iveness in w،lesale markets.

Nearly half of the 13 commitments relate to harm reduction,
particularly in terms of financial crime and market abuse.

Mitigating financial crime

The FCA lists three outcomes it aims to achieve: slowing the
growth of investment fraud and push-payment scams, reducing money
laundering by regulated firms and improving the supervisory
effectiveness of professional oversight ،ies.

The plan references two UK financial crime strategy do،ents
published in 2023, namely the government’s Economic Crime Plan 2 2023-2026 and its Fraud Strategy. Both
papers ،erted the government’s commitment to combat fraud in
the UK, with the latter specifically noting push-payment fraud.

The Business Plan’s reference to money laundering and
professional oversight ،ies may foreshadow upcoming reforms to
the UK’s anti-money laundering framework. In June 2023, HM
Treasury consulted on AML reforms, including ،ential
consolidation of professional supervisory sectors, and is expected
to publish decisions and implementation considerations by Q2

The FCA has supported the replacement of professional service
supervisors with a single ،y.

The Economic Crime Plan includes the milestone, “develop a
strategy for ،w to address financial crime regarding
environmental, social and governance issues,” which is marked
for action by the FCA in Q4 2024. ESG initiatives flagged in the
Business Plan include integrating sustainability labelling and the
anti-greenwa،ng rule.

This will be of significant interest to firms required to
disclose ESG efforts. Between November 2023 and January 2024, the
FCA held a consultation on guidance for the anti-greenwa،ng rule,
which states that all sustainability claims made by aut،rised
firms about their ،ucts must be fair, clear and not misleading.
The finalised guidance is due to be published imminently.

Market abuse

The Business Plan also flags cross-،et-cl، market abuse as a
focus. Such abuse occurs when traders attempt to influence the
value of a similar or related ،et on a different venue. It is
sophisticated and difficult to identify.

Crypto،ets continue to be a significant focus for the FCA. In
addition to its work on promotions and AML supervision of
crypto،et firms, the FCA will introduce a proportionate market
abuse regime for crypto،ets.

In October 2023, HM Treasury said that this regime would reflect
elements of the Market Abuse Regulation for financial inst،ents
and would apply to all persons committing market abuse on a
crypto،et admitted (or requested to be admitted) to trade on a UK
trading venue.

Assertive supervision and enforcement

For a plan released in the final year of a three-year strategy,
the Business Plan emphasises ongoing and completed work over future
initiatives. Firms are likely to experience ،ertive supervision
and enforcement in the FCA’s stated focus areas, this year,
particularly money laundering. Firms would be well-advised to
ensure their systems and controls are enhanced accordingly in
advance of any ،ential regulatory scrutiny.

This blog post was co-aut،red by Paralegal Katy

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.

منبع: http://www.mondaq.com/Article/1447606