Welcome to 'The FinCrime Connection', where we unpack the most significant stories in financial crime. This month, we highlight three key developments that financial crime professionals should have on their radar.
Story 1: NCA Celebrates 10 Years of Public Private Partnerships
The National Crime Agency is celebrating a significant milestone—10 years of the Joint Money Laundering Intelligence Taskforce (JMLIT), which launched in 2015 with the ambitious goal of enhancing intelligence sharing between law enforcement and the financial sector.
The results have been remarkable. Since its inception, the partnership has delivered approximately 1,200 operations, leading to 419 arrests and the publication of over 100 alerts to industry partners. What started as a modest initiative with 12 partners has evolved into a comprehensive Public Private Partnership model encompassing more than 200 organisations.
Global Impact and Inspiration
The success of the JMLIT model has resonated far beyond the UK's borders, inspiring the creation of more than 20 similar models globally. This demonstrates the power of collaborative approaches to tackling financial crime and the value of breaking down traditional silos between public and private sector organisations.
For financial institutions, this anniversary serves as a reminder of the importance of active participation in information-sharing initiatives. The data shows that collaborative approaches yield tangible results in the fight against financial crime, making it essential for organisations to engage meaningfully with these partnerships.
Story 2: FCA Embraces AI Innovation Through "Supercharged Sandbox"
Jessica Rusu, the FCA's Chief Data, Information and Intelligence Officer, recently delivered a speech that should encourage financial crime professionals across the industry. Her remarks highlighted how harnessing innovation, particularly artificial intelligence, sits at the heart of the FCA's five-year strategy.
The "Supercharged Sandbox" Initiative
Set to launch in October, the FCA's new "Supercharged Sandbox" represents a significant step forward in regulatory innovation. Alongside their AI Live Testing programme, the regulator is helping firms progress from proof-of-concept to testing AI innovations under supervisory oversight.
What's particularly encouraging is the FCA's openness to working alongside firms to develop new and innovative solutions for tackling financial crime. This collaborative approach signals a regulatory environment that understands the need for technological advancement while maintaining appropriate oversight.
Responsible AI Adoption
The speech reinforced a crucial message: while AI will never replace the need for experience, judgement, or regulatory oversight, it will undoubtedly change how we approach financial crime prevention. The question facing the industry is no longer whether to adopt AI, but rather how to manage it responsibly.
For financial institutions, this represents an opportunity to explore AI solutions with greater regulatory clarity and support. The FCA's proactive stance should encourage firms to engage with innovative technologies while maintaining robust governance frameworks.
Story 3: Monzo's AML Fine Highlights Familiar Patterns
The FCA has issued another significant fine for Anti-Money Laundering failings, this time targeting Monzo. The details of this case reveal striking similarities to the Starling Bank fine from last year, highlighting concerning patterns in the challenger bank sector.
The Growth Challenge
Both Monzo and Starling experienced exponential growth that significantly outpaced their control frameworks. This rapid expansion created vulnerabilities that ultimately led to regulatory action. The scale and speed of their growth became a liability rather than purely an asset.
Fundamental Control Failures
The similarities between the two cases are particularly noteworthy:
- Inadequate Screening and Verification: Both banks failed to implement adequate screening and verification capabilities. In Monzo's case, this resulted in accounts being registered at obviously implausible addresses, including 10 Downing Street and Buckingham Palace.
- High-Risk Customer Controls: Despite having restrictions in place to prevent high-risk customers from opening accounts, both banks continued to onboard such customers, undermining their own risk management frameworks.
Regulatory Implications
These failings resulted in breaches of the FCA's Principle 3, which requires firms to take reasonable steps to ensure they have organised their affairs responsibly and effectively, with adequate risk management systems.
The pattern emerging from these cases is clear: financial institutions must ensure their financial crime controls evolve in lockstep with business growth. Rapid expansion without corresponding investment in compliance infrastructure creates significant regulatory and reputational risks.
Key Takeaways for Financial Crime Professionals
These stories collectively reinforce several important themes:
- Collaborative Approaches Work: The success of JMLIT demonstrates that public-private partnerships can deliver tangible results in combating financial crime.
- Innovation Requires Governance: The FCA's AI initiatives show that regulatory innovation is possible when combined with appropriate oversight and responsible implementation.
- Growth Must Be Managed: The challenger bank fines highlight that rapid business growth without corresponding investment in compliance controls creates serious risks.
Financial crime professionals should view these developments as opportunities to strengthen their organisations' capabilities while contributing to broader industry efforts to combat financial crime.
Join us next month for more insights from The FinCrime Connection, brought to you by Jade ThirdEye.
This blog is based on the July episode of The FinCrime Connection, hosted by Claire Rees, Global Financial Crime Regulatory Specialist, and Phil Roberts, Business Development Manager for Jade ThirdEye in the UK. Claire brings extensive expertise in financial crime prevention, while Phil is excited to join the conversation and contribute to our ongoing discussions about industry developments.