The UK Financial Crime Authority (FCA) recently published their findings following a review of Financial crime controls at Challenger Banks. The review focused on six challenger banks, in response to the risks raised in the UK’s 2020 National Risk Assessment (NRA) of Money Laundering and Terrorist Financing. The NRA noted the potential for criminals to “be attracted to the fast on-boarding process that challenger banks advertise, particularly when setting up money mule networks”. The FCA also highlights a risk that challenger banks may consequently promote the ability to open accounts quickly to attract customers, without sufficient information gathered to identify high risk customers.
Among the key financial crime control areas that require improvement, the Customer Risk Assessment (CRA) was highlighted as a critical weakness. The FCA found that the CRA framework was not well developed in some challenger banks and “lacked sufficient detail”, with some challenger banks failing to even implement a basic CRA in the first place.