Financial firms risk criminal prosecution unless they help the watchdog tackle money laundering, the City's leading watchdog will warn today.
The Financial Services Authority has signed a partnership agreement with the National Criminal Intelligence Service to ensure that effective criminal action is taken to tackle money laundering.
The clampdown comes just 10 days after the FSA banned Sir Michael Richardson, one of the Square Mile's oldest practitioners, for writing letters that could have been used to launder money or commit fraud.
Following its first review of the state of compliance with money laundering regulations dating back to 1993, the FSA says many financial firms are failing in their obligations to prevent and detect the activity.
Tackling money laundering is among a host of new responsibilities, backed by formal powers, that the FSA receives on 1 December. In most cases, financial firms involved in money laundering are unaware their systems have been abused by third parties.
"Our aim is to work with the industry to help those firms that are behind the game step up a class in terms of preventing the risk of money laundering crystallising. Firms to be aware, though, that money laundering failures may result in formal regulatory enforcement or criminal prosecution," said Carol Sergeant, the FSA's managing director.
Among the areas where the FSA is most keen to see an improvement in money laundering controls are retail banking, sales of off-shore funds through independent financial advisors, spread betting and internet share dealing.
It says the mass domestic banking markets provides a means of laundering large volumes of small cash depositswhile there is a lack of awareness of how spread betting can be abused.Reuse content