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The Financial Conduct Authority

What is the FCA?

The Financial Conduct Authority (or FCA) is the UK’s principal financial regulatory body, responsible for upholding the integrity of financial organisations and markets in the United Kingdom. The FCA was founded in 2013, in the wake of the Financial Services Act 2012, and it became the official replacement for the FSA, which was abolished on the 1st of April 2013.

Who does the FCA protect?

The FCA is responsible for protecting firms in the financial market, as well as consumers. It supervises nearly 60,000 companies in the financial services industry across the UK, with the aim of ensuring that business is carried out in a fair and honest manner. The FCA operates in line with three primary objectives, which are as follows:

  1. To provide a level of protection for consumers

  2. To maintain and enhance the integrity of the financial system

  3. To promote competition between providers in the consumer’s interest

FCA Supervision

So, what does the FCA do? As the key supervisory body in the UK, the FCA is responsible for setting the standards that all financial products (such as ISAs, pensions and more) on the market must adhere to, in the wholesale and retail sectors. If the FCA determines that a financial firm’s products fail to meet the standards they set out, they may demand that these products are withdrawn, or suspend the firm’s right to provide them at all.

What are FCA regulations?

The FCA also upholds anti-money laundering regulations implemented by the Financial Action Task Force (FATF), which include recommendations made in the EU’s 5th Money Laundering Directive.

All banks and financial firms that are regulated by the FCA must also comply with these AML regulations. They can do this by taking measures like implementing a risk-based approach, carrying out customer due diligencesanction screenings and appointing MLROs within their businesses. 

FCA Registration and Authorisation

As set out in the Financial Services Act 2012, the FCA is legally required to regulate a number of specific financial activities. Organisations which carry out these regulated activities may therefore need to be registered or authorised with the FCA, or both. 

That means not only banks, but consumer credit firms, investment firms, benchmark administrators, payment services and e-money firms may all require registration or authorisation with the FCA.

It’s worth noting that banks, insurance providers and credit unions are regulated by the Prudential Regulation Authority (PRA) as well as the FCA. Firms in these categories should contact the PRA directly to apply for authorisation.

FCA Penalties

If a registered firm in the financial services industry fails to comply with AML regulations, then the FCA has a number of enforcement powers at its disposal. The FCA can take several different courses of action to punish non-compliance, but the penalty issued depends on the nature of the misconduct. Here are some examples of the possible consequences:

  • Withdrawing a firm’s FCA authorisation status

  • Banning firms and individuals from carrying out regulated activities

  • Issuing monetary fines to those who fail to comply

  • Launching criminal prosecution against parties involved

  • Issue public warnings about the misconduct of firms and individuals   

How SmartSearch Can Help

Fully complying with AML regulations can be a complex job, as it requires staying up to date with guidelines from the FCA, the FATF and the latest money laundering directive from the EU. 

At SmartSearch, we make ticking every AML compliance box easy, with our comprehensive range of AML products, all accessible via one convenient platform. SmartSearch can ensure your business is taking the right measures to counter financial crime risks, and remains audit-ready at all times.

Our services include everything from KYC checks to sanction and PEP screenings, and our electronic verification system uses the Dow Jones WatchList, which is updated every day to give you the most accurate results possible.

Frequently Asked Questions

What does FCA stand for?

FCA stands for Financial Conduct Authority – this is the name of the UK’s leading regulatory body for the financial services industry. The FCA was established in April 2013, when it officially replaced its predecessor, the Financial Services Authority.

Who does the FCA protect?

It’s a common misconception that the FCA only protects consumers in the financial services industry. In actual fact, the FCA is responsible for upholding standards of integrity which protect both the consumers and the firms within the financial system, as well as the industry as a whole.

Who needs FCA authorisation?

The FCA is bound by the Financial Services Act 2012 to authorise all firms in the financial services sector. That includes any firm which carries out regulated activities, such as banks, investment firms, and other consumer credit firms.

What can the FCA do if a company is non-compliant?

The FCA will not hesitate to issue penalties to firms which fail to comply with AML regulations. These penalties include, but are not limited to, formal public warnings, monetary fines, suspension from carrying out regulated activities and even criminal prosecution.