The underlying impact of REP-CRIM…

By Matthew Russell

Another year, another challenge for financial institutions in the financial crime compliance space.

The Financial Conduct Authority’s (FCA) financial crime return (‘REP-CRIM’) came into effect on 31 December 2016. If they haven’t already, institutions are probably going to be looking at their Management Information (MI) reporting during the first half of this year and asking themselves how this can be used and tailored to respond to the 35 REP-CRIM questions on financial crime risk and controls.

Despite trying to use existing processes wherever possible, firms I have spoken to seem to have readily accepted REP-CRIM as yet another cost of remaining compliant.

I wonder how many have considered and planned for the other long term impacts?

Most are likely to have looked at their data readiness, including quality of data and data gathering processes, availability of technology to support fulfilling the requirements, and the consistency in information obtained from different divisions and jurisdictions. However, I suspect many institutions remain nervous about how the information they report will benchmark them against their peers: while the financial crime return is a further regulatory requirement reinforcing the importance of operational effectiveness, it is also the first to so clearly compare institutions risk mitigation efforts with one another.

In my view, firms can stand out for the right reasons by taking a step back and undertaking a proactive assessment of their entire financial crime operating model. Controls should be of consistently sound quality and maturity not just across jurisdiction / divisions but also across financial crime risk types, with no areas standing out as deficient. Operating models also need to be sufficiently agile to cope with emerging threats and regulation that will undoubtedly be picked up in future REP-CRIM reporting requirements.

Firms can also realise cost efficiencies from reassessing and redesigning their financial crime operating models, allowing them to relieve commercial pressures at the same time as obtaining better risk coverage. For me, this is the heart of financial crime operational effectiveness, and the most proactive and thorough way to respond to the current REP-CRIM requirements.

For further information on REP-CRIM please see our summary guide.

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