Reported by Anneka Randhawa, Neill Blundell, and Jonah Anderson

(Summary version featured below)

On January 23, 2025, the UK’s Financial Conduct Authority (FCA) released an updated report addressing the persistent threat of money laundering within capital markets. This report underscores the complexities regulators and law enforcement face in detecting illicit activities amidst the vast volume of legitimate transactions in London’s financial hub. The FCA emphasizes the critical role that regulated financial services firms play in combating these risks and advocates for the enhancement of systems and controls, including the integration of artificial intelligence into compliance frameworks. 

The FCA’s analysis was prompted by commitments outlined in the UK’s second Economic Crime Plan (2023-26) and insights from its supervisory activities. The report highlights that, despite progress, significant gaps remain in areas such as business-wide risk assessments, customer due diligence, transaction monitoring, and suspicious activity reporting. The FCA calls for firms to adopt a proportionate risk-based approach, ensuring robust systems are in place at every stage of the customer and transaction journey. 

Given London’s status as a global financial center, the FCA acknowledges the dual challenges of facilitating economic growth while preventing financial crimes like fraud and sanctions evasion. The report notes that the sheer volume of trades can obscure illicit activities, making detection challenging. To address this, the FCA has been actively involved in initiatives such as the Money Laundering Through the Markets Group of the Joint Money Laundering Intelligence Taskforce, fostering collaboration between regulators, law enforcement, and the financial sector to enhance understanding and mitigation of these risks. 

Read full report: https://www.whitecase.com/insight-alert/call-arms-fca-highlights-ongoing-risk-money-laundering-through-capital-markets