24 May 2010 | By Nicole Blackmore Full article http://www.moneymarketing.co.uk/1012285.article?cmpid=MME01&cmptype=newsletter
Many small firms do not have adquate systems and controls in place to combat financial crime and fail to customise solutions provided by external consultants, according to the FSA.
The regulator today published the findings of its review into small firms’ anti-financial crime systems and controls, which covered anti-money laundering and financial sanctions, data security and fraud controls.
The review started in April 2008 and looked at 159 small firms across the retail and wholesale sectors.
The review identified that a number of firms’ financial crime systems and controls have weaknesses in some areas.
The FSA says few firms have appropriate due diligence systems in place to identify or deal with higher risk customers or situations.
Of 42 IFAs visited, 17 had monitoring systems in place capable of identifying suspicious activity, but only nine of these had effective procedures for managing hits on these systems.
The FSA says the majority of firms rely on policies and procedures that have been prepared by consultants, which in a number of cases are not tailored to their business.
It says 52 per cent of the IFAs surveyed use consultants to produce policies and procedures, but these had generally not been tailored by the senior management of the firms
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