Financial crime
Also called economic crime, fincrime
Financial crime is any offence involving money, financial services or markets, typically fraud, money laundering, terrorist financing, bribery and corruption, sanctions evasion and market abuse. UK law defines it to include offences involving fraud or dishonesty, misuse of market information, handling the proceeds of crime and financing terrorism.
How it works
Most banks and insurers run a financial crime compliance function that covers several risks under one framework. It sets policies, runs customer due diligence and screening, monitors transactions and trading, and investigates alerts. Many firms combine fraud and AML teams because the same data, such as account behaviour and device signals, helps detect both.
Regulators expect firms to show their systems counter the risk of being used to further financial crime. In the UK, the FCA can act where controls are weak even if no crime is proven. Senior managers carry personal responsibility for these systems, and boards receive regular financial crime risk reporting.
The rules
Defines financial crime to include offences involving fraud or dishonesty, market misconduct, handling the proceeds of crime and financing terrorism.
FCA-regulated firmsRequires adequate policies and procedures to ensure regulatory compliance and to counter the risk that the firm is used to further financial crime.
FCA-authorised firmsMakes a large organisation criminally liable when an associated person commits fraud for its benefit, unless it had reasonable fraud prevention procedures.
Large organisations meeting two of three size testsSet the global baseline for national laws on money laundering, terrorist financing and proliferation financing, which form the core of financial crime regimes.
Countries, which apply them to regulated firms through national lawCommon questions
What counts as financial crime?
Common types are money laundering, terrorist financing, fraud, bribery and corruption, sanctions breaches, tax evasion facilitation, market abuse such as insider dealing, and cyber-enabled theft. Regulators group them because firms use overlapping controls to prevent them.
Is financial crime the same as AML?
No. AML is one part of financial crime compliance. Financial crime also covers fraud, bribery, sanctions and market abuse, each with its own laws, although firms often manage them in one function.
Who is responsible for financial crime at a UK firm?
Under the Senior Managers and Certification Regime, a senior manager holds the prescribed responsibility for the firm's policies and procedures for countering the risk of financial crime. The MLRO is responsible for AML oversight.
