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Claire Rees17 May 24

A Closer Look at the Proposed FCA Guidance for Transaction Monitoring

A Closer Look at the Proposed FCA Guidance for Transaction Monitoring

Claire Rees' latest blog for UK Finance takes a closer look at the proposed FCA Guidance for Transaction Monitoring and was prompted by the FCA's recently published consultation paper which proposes changes to their Financial Crime Guide for firms. 

This paper proposes changes or additions to sections covering Sanctions, Proliferation Finance, Transaction Monitoring, Crypto, Consumer Duty and Consequential Changes.  

The proposed changes include the Transaction Monitoring section of the guide being extended: many of the recent fines levied by the FCA have involved poor application of technology. Considering this alongside the volume and speed of change in financial crime (with both the good and bad guys innovating to keep pace with each other) it’s clear that further guidance is needed and should be welcomed by firms.  

You can read the full blog: A closer look at the proposed FCA Guidance for Transaction Monitoring on the UK Finance Website.

Below we expand on the UK Finance Blog and highlight how Jade ThirdEye can support the scenarios proposed in the guide:

  • It’s clear that the regulator expects firms to fully understand the system/s they are using, and that it is configured appropriately to meet the business needs, both at the outset and as the business evolves over time. It’s also vital to ensure that all decisions are clearly evidenced and if required, the firm is able to clearly articulate what the monitoring is looking for and the rationale behind this.

Not only does Jade ThirdEye’s rules engine capture all changes made to rules (in fact all activity within Jade ThirdEye is captured in audit logs which are searchable and reportable from within the app), but it also provides a place to capture firms’ narrative – a place to keep a log of the reasons for any changes and details of the sign-off process. 

  • Examples of good practice in the draft text include,  "Where a firm learns that criminals have abused its facilities, a review is performed to learn how monitoring methods could be used to lessen the risk of recurrence”.  If you’ve seen a new fraud hit your business, looking back at what happened and the data points in the scenario that you could have identified sooner is vital.  It not only allows you to enhance your transaction monitoring rules but should feed into your staff training. 

Jade ThirdEye includes a Rules Sandbox, which is ideal in this scenario. This allows users to design their rules and run them across their live data within the Sandbox, giving results in a matter of seconds. Using this enables firms to quickly tweak and re-run their rules as many times as necessary before making them live, ensuring that they are capturing the right transactions and behaviours before they are promoted into the live environment and start to impact operations.

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Claire Rees

Claire Rees is a Financial Crime Regulatory Specialist in the UK for Jade ThirdEye. Claire has over 21 year's experience working in Risk Management roles in financial services, 17 years of which were spent specialising in Financial Crime Prevention in a number of senior roles including most recently as Head of Fraud and AML with a mortgage lender and service provider. Claire has participated in a number of regulatory and industry Financial Crime panels including a Government AML advisory panel and the CIFAS Insider Threat Advisory Board which explored ever-changing insider fraud threats.