FIN.

FCA extends financial crime reporting obligation

Following its consultation in August 2020, the FCA has announced it is increasing the number of firms that need to submit an annual REP-CRIM return from c.2,500 to c.7,000 firms. In summary, the following additional firms will be required to provide financial crime information irrespective of their total annual revenue:

  • certain FSMA authorised firms falling within the scope of the MLRs which either hold client money or assets (ie holding under FCA Handbook CASS 5, 6 or 7) or carry on an activity that FCA considers poses higher money laundering risk (eg dealings in investments as agents and managing investments).
  • all payments institutions except for payment institutions that:
    • only carry on at least one of the following payment services:
      • money remittance (these firms are supervised by HMRC for AML purposes);
      • account information services and/or payment initiation services. These firms do not receive or hold clients’ money and do not carry out payment transactions, and so pose a lower AML risk;
      • a person with temporary PI authorisation that immediately before IP completion day was providing payment services other than through a branch in the UK or a UK-based agent (as defined in the FCA handbook), as per revision to instrument.
    • all electronic money institutions.
    • all Multilateral Trading Facilities.
    • all Organised Trading Facilities (OTFs). OTFs are a type of firm introduced by MiFID II, and therefore FCA is bringing them with the scope of the REP-CRIM obligations and updating its rules.
    • all cryptoasset exchange providers and custodian wallet providers.

The new rules will take effect on 30 March 2022.

Lucy Hadrill