FCA Restricts Six Annex 1 Firms Over Anti-Money Laundering Controls

The Financial Conduct Authority has placed restrictions on six Annex 1 firms after raising concerns about their anti-money laundering policies, controls and procedures while assessing their applications. The firms are unregulated lenders registered with the FCA for supervision under the Money Laundering Regulations, rather than firms authorised for the FCA’s wider regulatory regime.

According to the FCA’s 23 October release, the restrictions were imposed at each firm’s request. They limit the firms’ ability to take on new customers or conduct new business with existing customers, including extending existing credit. Some of the restrictions also require an independent review of the firm’s anti-money-laundering framework or an orderly wind-down of existing lending business.

The regulator said it is increasing scrutiny of Annex 1 firms and assessing responses to an information request sent to around 900 registered firms. It also reminded regulated firms dealing with Annex 1 firms to conduct their own due diligence; registration under the Money Laundering Regulations does not replace those checks.

Why it matters

For traders and investors, the announcement is a reminder to distinguish an FCA-registered firm from an FCA-authorised one. A firm may be registered for anti-money-laundering supervision without holding permissions to provide regulated investment or brokerage services. Check the FCA Register, a firm’s permissions and any restrictions before opening an account or transferring funds.

What to watch next

Watch for further FCA action as it reviews responses from Annex 1 firms. Firms that cannot demonstrate effective financial-crime controls may face additional restrictions or enforcement action.