AI in financial services 

Our latest monthly round-up looks at:

• FCA's AI Input Zone

• FSB report on financial stability implications of AI

• third survey on AI and machine learning in financial services.

FCA outlines financial promotion risks of providing services to unregistered cryptoasset firms

On 26 November 2024, the FCA published a new webpage setting out its expectations relating to cryptoasset financial promotions and fiat-to-crypto on/off ramp services.

The webpage is intended for cryptoasset firms registered under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), payment services and electronic money (e-money) firms authorised or registered under the Payment Services Regulations 2017 (PSRs) or Electronic Money Regulations 2011 and firms authorised under the Financial Services and Markets Act 2000 (FSMA).

The webpage is part of the FCA's ongoing effort to address concerns that regulated and registered firms are not adequately meeting their obligations when working with unregistered cryptoasset firms, which may be illegally promoting to UK consumers. The FCA notes it is encouraged by the steps many firms are taking to address these concerns. These steps contribute to improving consumer protection under the financial promotion regime are effective.

The webpage highlights potential harms from partnerships with cryptoasset firms involved in illegal promotions and the risks firms face when providing services to such businesses.

It also offers examples of positive steps taken by regulated and registered firms to address the FCA's concerns. It also includes stylised consumer journeys involving an MLR registered firm providing on/off ramp services and an FCA authorised payment services provider, showing how regulated and registered firms may be at risk of breaching their own regulatory obligations.

Suggested protective measures include helping unregistered cryptoasset firms understand the financial promotions regime, conducting thorough due diligence, engaging with a section 21 approver and implementing robust control frameworks.

The FCA urges firms considering partnerships with unregistered cryptoasset firms to review the webpage carefully. This ensures they meet their obligations when providing support services to unregistered cryptoasset firms that are illegally promoting to UK consumers.

FCA crypto policy roadmap and cryptoasset consumer research

On 26 November 2024, the FCA published a crypto roadmap outlining its proposed policy publications for cryptoassets and their anticipated content.
The roadmap provides an indicative timeline for discussion papers, consultation papers and policy statements relating to the stablecoins and cryptoassets regulation. Following the government's confirmation of its approach, it will involve a single timetable for HM Treasury's work on the new regulated activities for stablecoins and the new regulatory regime for cryptoassets.

The FCA expects all policy statements and final made rules will be published in 2026, with the FCA's cryptoasset regime going thereafter. However, the roadmap is not exhaustive, and timelines may change based on parliamentary time and future government directions.

Alongside the roadmap, the FCA has published a research note on consumer research carried out by YouGov, looking at cryptoasset holdings in the UK and consumers' understanding, attitudes and behavioural patterns towards them. Notably, there was a 2% increase in UK adults owning cryptoassets (around 7 million adults). Almost a third of those surveyed believed that they could complain to the FCA if something went wrong despite limited regulations. In a related press release, the FCA said that the research results highlight the need for clear regulation that supports a safe, competitive and sustainable UK crypto sector.

As part of its policy development, the FCA held several roundtables with industry stakeholders (including crypto exchanges, banks, trading firms, blockchain analytics companies, law firms, industry associations and universities). The FCA has published a blog outlining the topics that were discussed, which covered admissions and disclosures, the market abuse regime, and trading platforms and intermediaries.

HM Treasury speech on approach to cryptoasset and stablecoin regulation

On 25 November 2024, HM Treasury published a speech by Tulip Siddiq, Economic Secretary to the Treasury, on the UK government's approach to tokenisation and regulation.

Cryptoassets

• HM Treasury will implement proposals from October 2023 for the financial services regulation of cryptoassets in the UK (see our October 2023 update). These include new regulated activities for cryptoassets, like operating a cryptoasset trading platform, alongside associated regimes for admissions to trading and market abuse.

• HM Treasury will also clarify that cryptoasset staking services are not collective investment scheme under financial services law. 

Stablecoins

• HM Treasury will proceed with proposals from October 2023 to introduce regulated activities for stablecoins. These proposals included the creation of a new regulated activity for issuance of stablecoins in the UK, as well as safeguarding requirements in line with the custody of other cryptoassets. It will not introduce stablecoin regulations within UK payments regulation, deeming it disproportionate at this time. 

A single timetable will guide work on new regulated activities for both stablecoins and cryptoassets. HM Treasury aims to engage with firms on draft legal provisions for the cryptoasset regime, including stablecoins, as early as possible in 2025.

Property (Digital Assets etc) Bill: second reading in Grand Committee and new factsheet published

On 6 November 2024, the Property (Digital Assets etc) Bill had its second reading in Grand Committee in the House of Lords. The Second reading was formally taken in the House of Lords chamber on 13 November 2024, after which the Bill was committed to a Special Public Bill Committee.

The Bill makes provision about the types of things that are capable of being objects of personal property rights. It states that a thing (including a thing that is digital or electronic in nature) can attract property rights even if it does not fit into the traditional categories:

• A thing in possession (generally, tangible things).

• A thing in action (that is, personal property that can only be claimed or enforced through a court action such as debts or contract rights).

The Bill does not establish that any particular category of thing is property or set out the implications of a digital thing being recognised as property. Established common law tests can still be used to determine property status in each case.

The government published an accompanying factsheet on 6 November 2024. This explains that the Bill's benefits include providing certainty and protection for those owning or transacting in digital assets, like cryptocurrency, non-fungible tokens and virtual carbon credits. If stolen, owners will have legal rights and remedies, and these assets can form part of an estate, used as loan security or accessed by creditors in bankruptcy.

The government intends for the Bill to maintain English law as an attractive jurisdiction to deal with and litigate cryptoassets and other 'third category' things. The Bill gives effect to the Law Commission's 2023 report on digital assets.

The government hopes that the Bill will ensure that the jurisdiction of English law continues to be an attractive place to deal with and litigate in respect of cryptoassets and other "third category" things. Recognising a further category of personal property should also decrease litigation costs and court time by giving certainty as to its existence (see our July 2023 update).

HM Treasury consults on UK green taxonomy

On 14 November 2024, HM Treasury published a consultation on the UK green taxonomy.

The consultation aims to determine if a UK green taxonomy complement existing policies to mitigate greenwashing and support the government’s sustainability objectives. A taxonomy provides a common framework to define whether economic activities support climate, environmental or wider sustainability objectives.

The government will consider the experiences of other jurisdictions with green taxonomies— 20 jurisdictions currently have a government-endorsed taxonomy, whilst approximately 30 are considering one. This global perspective will help assess the potential value of a UK taxonomy and how to design it for maximum impact.

Chapter 2 explores possible use cases for the taxonomy, ranging from highly focused uses, such as providing a tool for appraising green bonds, or broader uses like supporting investor decision making. Likewise, the government seeks views on whether a UK green taxonomy is a suitable tool for supporting the mobilisation of transition finance.

Chapter 3 sets out key design features, including international operability, environmental objectives and sectoral scope, the "do no significant harm" (DNSH) principle, business practice safeguards and how to update the taxonomy. The HM Treasury does not seek feedback on specific activity-level standards.

The consultation concludes on 6 February 2025.

HM Treasury response to consultation on regulatory regime for ESG rating providers

On 14 November 2024, HM Treasury published a response to its consultation on a future regulatory regime for ESG rating providers under the Financial Services and Markets Act 2000 (FSMA).

HM Treasury confirms that it will proceed with its proposal to bring the provision of ESG ratings within the scope of the FSMA perimeter, covering ratings produced in the UK and overseas-ratings made available to UK users by way of a business relationship.

HM Treasury has also published a draft version of the statutory instrument the Financial Services and Markets Act 2000 (Regulated Activities (Amendment) (No 2) Order 2024, which will bring ESG rating providers within the FSMA perimeter. It adds a new Chapter 15F to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, making ESG ratings a regulated activity under Article 63U, with an exclusion for firms creating ESG ratings as part of a regulated activity under Article 63V.

Comments on the statutory instrument are due 14 January 2025. HM Treasury intends to bring the statutory instrument before Parliament in early 2025. Following this, the FCA will consult on policy proposals for the regime, considering rule changes for firms befitting from the article 63V exclusion.

The FCA is also exploring its approach to overseas ESG rating providers applying for UK authorisation based on size, significance, or market impact. HM Treasury is considering alternative access routes for overseas providers, including market access regimes for foreign-issued ratings.

The overall process of designing and implementing the ESG ratings regulatory regime is expected to take approximately four years.

FCA finalised guidance enabling risk-based approach to payments

On 22 November 2024, the FCA published finalised guidance on authorised push payment (APP) fraud and enabling a risk-based approach to payment processing (FG24/6).

The guidance responds to HM Treasury's request for clarity on how payment service providers (PSPs) should apply the changes introduced by the Payment Services (Amendment) Regulations 2024 (the Amendment Regulations), effective 30 October 2024. The Amendment Regulations enable PSPs to delay payments by up to four business days to investigate transactions where there are reasonable grounds to suspect fraud or dishonesty by someone other than the payer.

FG24/6 outlines:

• The requirements for delaying outbound payments and determining whether the threshold for "reasonable grounds to suspect" has been met.

• How PSPs should use the payment delay window.

• PSPs' obligations when delaying outbound transaction.

• The treatment of suspicious inbound payments.

The FCA summarises the feedback received to its September 2024 consultation on the guidance (GC24/5) (see our October 2024 update).

The FCA has amended its payment services and electronic money approach document to include the new guidance in Chapter 8, effective 22 November 2024. A tracked changes version of the document has been published for reference.

HM Treasury recommendations for FCA and PSR regulation of payments

On 15 November 2024, HM Treasury published the letter (dated 14 November 2024) it has sent to the FCA and the Payment Systems Regulator (PSR) setting out its recommendations for the regulators relating to payments regulation.

Key recommendations:

• Enhancing co-ordination to address congestion in the regulatory landscape. The government is taking several actions to improve co-ordination between authorities to support the growth of the payments sector. The payments remit letter welcomes the FCA's commitment to lead efforts in managing overlaps between the FCA and PSR's functions, particularly in relation to fraud policy.

• Supporting the development of open banking. In line with its vision to increase payment method choice across the ecosystem, the government calls on the FCA and PSR to consider its commitment to developing open banking to drive delivery of seamless account-to-account payments. The government has asked the FCA to be the UK's regulator for open banking, while ensuring effective engagement with other relevant authorities, including co-operating with the PSR on matters related to designated payment systems.

• Ensuring high standards of consumer protection and that people and businesses can make payments efficiently and safely. The government welcomes upcoming work from the regulators to examine data sharing initiatives across the financial services sector.

• Driving an agile and flexible approach to delivering the UK's retail payments infrastructure needs, including revisiting requirements, governance and funding arrangements.

HM Treasury launches new National Payments Vision

On 14 November 2024, HM Treasury published its National Payments Vision (Vision), outlining ambitions for the UK's payments sector to deliver world-leading payments and support economic growth.

The Vision predominantly focused on retail payments, responds to the findings of the independent November 2023 Future of Payments Review. 

The three key pillars of the Vision are: innovation, competition and security. Among other things, the Vision:

• Identifies the steps being taken to enhance regulatory co-ordination and address congestion in the payments landscape. These include clarifying regulatory responsibilities for open banking and providing recommendations for the FCA and the Payment Systems Regulator (PSR).

• Emphasises the importance of open banking in delivering seamless account-to-account payments. The government aims to build a long-term regulatory framework that extends current payment account access requirements.

• Sets out the government's commitment to explore a potential retail central bank digital currency (CBDC), the digital pound.

• Highlights the need to maintain high standards of consumer protection and efficient, safe payments. The FCA will manage overlaps in fraud regulation with the PSR, which will review authorised push payment fraud reimbursement rules after 12 months.

• Acknowledges that significant investment is needed in the UK's retail payments infrastructure to ensure it is resilient and better enables innovation and competition. This includes upgrades to the UK’s Faster Payments System and improving governance arrangements.

The government is establishing the Payments Vision Delivery Committee, which will be supported by an engagement group comprised of varied representatives from across the sector. HM Treasury has published the committee's terms of reference.

The PSR, FCA and Bank of England have welcomed the Vision.

PSR Dear CEO letter to tech firms on APP fraud enabler data

On 8 November 2024, the Payment Systems Regulator (PSR) published a Dear CEO letter to tech firms explaining its proposals to publish data on firms most commonly reported as enabling contact between fraudsters and victims.

The PSR refers to its work on requiring mandatory reimbursement for victims of authorised push payment (APP) fraud and aims to prevent fraud by better understanding how fraudsters contact and gain the trust of victims.

In 2024, the PSR required the UK's 14 largest banking groups to provide data reported by victims on fraud committed in 2023. That data includes the frequency of fraudulent activity reported as being enabled via certain tech firms' platforms or services, as well as through other providers.

The PSR will publish this data the week of 9 December 2024 and has sent each relevant firm their performance data relative to others identified in the dataset.

The PSR defines "fraud enablers" as platforms or services fraudsters use to contact victims and promote APP scams. An "enabler" is an entity reported by the victim as either: 

• a platform or service through which the fraudster contacted the victim, or

• a website or platform where the victim saw an advertisement or profile that led to an APP scam.

It proposes annual publication of this data.

FCA letter to Supreme Court on motor finance judgment

On 3 December 2024, the FCA published its letter to the Supreme Court regarding applications by FirstRand Bank and Close Brothers seeking permission to appeal the  recent Court of Appeal judgment in Johnson v FirstRand Bank Ltd on motor finance commission. The proposed appellants have sought expedition of the permission decision. The FCA aims to provide additional context and information to assist the court in determining the next steps in the proceedings.

Key points include:

• The FCA supports the proposed appellants' applications for expedition of the appeal. It urges the court to determine the substantive appeal quickly to ensure certainty and stability in the market.

• The applications raise important points of law related to the law of bribery and fiduciary duties, which could significantly affect the motor finance sector. These issues may impact potential compensation for consumers and require adjustments to business models. There could also be wider implications for other financial services markets that involve intermediary arrangements.

• Accounting standards require firms to account for uncertain liabilities and contingent liabilities. Following the judgment, analysts have raised concerns about increased uncertainty and downside risk for affected firms. As a result, forecasts for the likely size of compensation liabilities have been revised, and some firms have experienced a material impact on their share price.

• The reported increase in complaints is significant. From January to March 2024, major banks and non-bank lenders, representing 82% of the consumer motor finance market, received approximately 335,000 non-discretionary commission arrangements (DCA) complaints. Between January and February 2024, the number of complaints increased five times within just one month.

• The FCA estimates that by January 2025, over 470,000 motor finance DCA complaints may be filed following this judgment. Almost 99% of the 31.7 million motor finance agreements entered into since 2007 included broker commission, making the issues raised in the appeal relevant to a large number of pending complaints.

For further detail on the judgment, see our article.

FCA to further consult on extending temporary changes to handling rules for motor finance complaints

On 13 November 2024, the FCA published a consultation CP24/22 on temporary changes to handling rules for "non-discretionary commission arrangements (DCA) commission complaints" (in keeping with the changes for handling DCA commission complaints). This follows the Court of Appeal's judgment in Johnson v FirstRand Bank.

Key points include:

The consultation focuses on two options for extending the complaint handling time limits:

• Option 1: Extension until 4 December 2025 to align with the rules for firms dealing with DCA commission complaints and limit the risks of consumer confusion. 

• Option 2: Extension until 31 May 2025, based on the FCA's best estimate of how when the Supreme Court to decide whether to grant to permission to appeal.

The FCA proposes defining "non-DCA commission complaints" (which will be covered by the temporary changes) as those that:

• Are not related to motor finance DCA complaints (covered by the FCA's existing temporary changes).

• Involve a regulated credit agreement financing (wholly or partly) the purchase of a motor vehicle.

• Include an arrangement for commission payment between the lender and broker.

Importantly, hire agreements will be unaffected by these changes, as the Court of Appeal's judgment only pertained to regulated lending, not hire agreements.

The consultation closed on 5 December 2024. For further detail on the judgment, see our article.

FCA publishes revised consultation paper outlining intention to reshape proposals for publicising enforcement investigations

On 28 November 2024, the FCA published the second phase of its consultation on a new approach to publicising enforcement investigations (CP24/2 Part Two) in response to widespread criticism of its earlier so-called "name and shame" proposals. 

The consultation closes for responses on 17 February 2025. Finalised proposals are expected in Q1 2025. There are four key changes:

• The FCA now proposes that the impact of an announcement on the relevant firm should form part of its public interest test and be central to its consideration to announce an investigation and name the firm. 

• The FCA is now suggesting giving firms 10 business days' notice of an announcement, with a further two days' notice if, following this, it decides to go ahead and announce. This is instead of the originally proposed one days' notice to give firms more time to make representations. This would also give firms time to consider whether they wish (or need) to make an announcement themselves or make representations as to how and when that could be done.

• The FCA proposes that the potential for an announcement to seriously disrupt public confidence in the financial system or the market should be a new factor in the public interest test.

• The FCA will not make proactive announcements of investigations that are on-going when the proposals come into effect, although it may reactively confirm on-going investigations.

This follows an oral evidence session held on 13 November 2024, featuring Nikhil Rathi, FCA Chief Executive, and Ashley Alder, FCA Chair, as part of the House of Lords Financial Services Regulation Committee's inquiry into the consultation.

FCA bans director following criminal conviction and provision of false information

On 18 November 2024, the FCA published final notices issued to Ari Harris and Reeds Motors Ltd, the firm where Harris was sole director.

• Harris was convicted of inflicting grievous bodily harm without intent in July 2020 (while he was an approved person at Reeds Motors) and sentenced to three years' imprisonment in July 2022. He failed to notify the FCA of these criminal proceedings, the conviction and imprisonment.

• Harris provided false and misleading information to the FCA regarding a 2022 application to appoint a new director for the Senior Management Function (SMF29) at Reeds Motors. The FCA inquired why an additional approved person was needed, and both Harris and the firm falsely claimed he was overseas pursuing business opportunities.

• Harris continued to mislead the FCA during a telephone call, failing to mention that he was actually in prison at the time.

This conduct demonstrated a clear and serious lack of honesty, integrity and reputation, breaching the FCA's fit and proper test found in the FIT module of the FCA Handbook (specifically FIT 1.3.1G). 

The FCA has removed Harris's approval to perform the senior management function at the firm and has imposed a ban that prevents him working in financial services in the future. The firm has also had its permission cancelled for failing to satisfy the FCA's Threshold Conditions, for breaching Principles 1 and 11 of the FCA's Principles for Businesses and for failing to notify the FCA of criminal proceedings as required under SUP 15.3.1R.

A related FCA press release reminds regulated firms and individuals subject to the Senior Managers and Certification Regime (SM&CR) of the ongoing obligation to disclose any information of which the FCA would reasonably expect notice, such as related to an approved person's fitness and propriety.

FCA fines and bans individuals for recklessly breaching requirements

On 15 November 2024, the FCA published final notices (both dated 14 November 2024) issued to Craig Buchan and Martin Cooke, former partners of MedDen Financial Services LLP.

In December 2020, the FCA imposed an asset requirement on MedDen, preventing the firm from diminishing the value of any of its own assets. The asset requirement was imposed to safeguard MedDen's assets for the benefit of its customers who were owed redress for financial losses suffered because of advice they had received. However, the day after the requirement was imposed, both individuals recklessly withdrew funds from MedDen's bank account for their own benefit, leaving no money for customers' redress. They also failed to report the breach to the FCA.

The FCA found that both individuals acted in breach of individual Conduct Rule 1 under the Senior Managers and Certification Regime for lack of integrity, fining Buchan £6,037 and Cooke £6,020. Both were also prohibited from performing any function in relation to any regulated activities for recklessly breaching the asset requirement.

The Financial Services Compensation Scheme (FSCS) has paid approximately £2.2 million in relation to 35 claims concerning MedDen.

FCA fines Metro Bank for financial crime failings

On 12 November 2024, the FCA published the final notice it has issued to Metro Bank plc fining it £16,675,200 for financial crime failings.

Between June 2016 and December 2020, Metro Bank failed to have the right systems and controls to adequately monitor over 60 million transactions, with a value of over £51 billion, for money laundering risks.

Metro Bank implemented an automated transaction monitoring system (ATMS) in June 2016 to monitor customer transactions for potential financial crime. However, an error in data feed meant transactions on the same day an account was opened were not monitored until the account record was updated.

The FCA found that Metro Bank breached Principle 3 (Management and Control) of its Principles for Businesses due to these failings. Key failings include:

• Metro Bank did not have controls in place to check, on an ongoing basis, that transactions were being correctly monitored.

• Metro Bank failed to put in place adequate systems and controls to manage "bad data" (as referred to internally) that was rejected from the ATMS. It failed to establish a process to regularly review the data.

• Bad data was recognised as a risk and a serious issue at comparatively less senior grades within Metro Bank and individual staff members investigated and attempted to escalate this issue to more senior staff and committees in 2017 and 2018, but these issues were not adequately addressed. Even once a fix was applied in July 2019, Metro Bank still lacked a consistent mechanism to ensure to consistently check that all relevant transactions were being fed into the monitoring system until December 2020.

• Metro Bank did not fully understand the extent of anti-money laundering risk associated with unmonitored transactions, partly due to internal transactions masking the volume of rejected data. This issue went unresolved for our years. 

BoE updates Enforcement Decision Making Committee procedures

On 12 November 2024, the Bank of England (BoE) published an updated version of its Enforcement Decision Making Committee (EDMC) procedures.

The update follows the Financial Services and Markets Act 2023, which introduced new and expanded existing regulator enforcement powers. The EDMC encompasses decisions in enforcement cases concerning exercise of those powers.

The EDMC, established by the Court of the BoE, helps the BoE discharge its responsibilities and strengthen its enforcement processes. The procedures were first published in 2018.

FCA statement on changes to disclosure process in regulatory enforcement cases

On 11 November 2024, the FCA published a statement on the outcome of its enforcement regulatory disclosure review, following the Upper Tribunal's recommendation in Seiler and others v FCA [2023] UKUT 00133. The Tribunal advised the FCA to broaden its approach to evidence disclosure in regulatory cases.

The FCA has completed the review and made several changes to its processes. These involve:

• Taking a broader approach to disclosure, that will mean the FCA's review of documents is not only focused on identifying potentially undermining material.

• Enhancing existing training on disclosure to include additional specialist training for those managing and overseeing disclosure exercises.

• Providing additional training for staff and more detailed guidance on quality assurance.

• Clarifying the roles and responsibilities of staff and managers involved in disclosure.

• Giving greater emphasis on disclosures in staff performance assessments.

Under the FCA's new broader approach, it will disclose all relevant material unless it is disproportionate, not in the public interest, or inappropriate. This includes both undermining and supporting material. Disclosure reviews will be aimed at identifying all the relevant material rather than only looking for potentially undermining material. This will reduce the risk of it mistakenly failing to disclose a document.

The FCA will closely monitor the effectiveness of its changes and conduct a further review in approximately one year's time to assess.

FCA secures criminal convictions against two individuals for investment fraud

On 7 November 2024, the FCA published a press release announcing convictions of two individuals for investment fraud following an FCA prosecution.
Between February 2017 and June 2019, the individuals defrauded at least 65 investors out of £1,541,799 by cold-calling consumers and directing them to a professional-looking website offering high returns on fake crypto investments.

The first individual pleaded guilty to conspiracy to defraud under the Criminal Law Act 1977 and the Fraud Act 2006, conspiracy to breach the general prohibition under section 19 of FSMA and money laundering offences under the Proceeds of Crime Act 2002.

The second individual pleaded guilty to conspiracy to defraud, conspiracy to breach the general prohibition and possession of false identification documents under section 4 of the Identity Documents Act 2010. This individual was convicted of perverting the course of justice for deleting phone recordings after the first individual's arrest in March 2019.

The two individuals will be sentenced at a later date.

A retrial for a third individual is scheduled for September 2025 after the jury couldn't reach a verdict. A fourth individual was acquitted of money laundering, and another remains wanted.

The FCA commenced criminal proceedings against four individuals in April 2023 (see our May 2023 update). The press release notes that, in 2023/24, the FCA secured nine successful fraud prosecutions and charged 21 individuals with financial crime offences, the highest number of charges in any single year.

FCA finalises changes to its Financial Crime Guide

On 29 November 2024, the FCA published policy statement PS24/17, which contains the final updates to its Financial Crime Guide (FCG) following its April 2024 consultation paper (see our May 2024 update) together with responses to the feedback it received to the consultation.

The revised FCG, which is relevant to all FCA financial crime supervised firms and firms supervised under the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (including cryptoassets businesses), includes updates on sanctions, proliferation financing, transaction monitoring, cryptoasset businesses, the Consumer Duty, and data security as well as consequential changes and refreshed case studies.

The updates are designed to assist firms in understanding what the FCA expects and will help them to evaluate their financial crime systems and controls, and addressing any shortcomings. Firms should review and, where appropriate, modify their financial crime compliance frameworks in response to these changes. This may involve alterations to internal policies, monitoring systems, training, governance, or other aspects of their systems and controls.

EBA final report on guidelines on policies, procedures and controls to ensure compliance with restrictive measures

On 14 November 2024, the EBA published a final report outlining the final version of:

• Guidelines on internal policies, procedures and controls to ensure the implementation of Union and national restrictive measures (EBA/GL/2024/14). These guidelines, which were produced by the EBA on its own initiative, apply to financial institutions regulated and supervised under the CRD IV Directive, the revised Payment Services Directive and the Second Electronic Money Directive and their supervisors. They outline the governance arrangements and internal policies, procedures and controls needed for compliance with restrictive measures.

• Guidelines on internal policies, procedures and controls to ensure the implementation of Union and national restrictive measures under the Wire and Cryptoasset Transfer Regulation (WCTR) (EBA/GL/2024/15). These guidelines, issued under Article 23 of the WCTR, apply to payment service providers (PSPs), cryptoasset service providers (CASPs) and their supervisors. They detail the internal policies, procedures and controls required to comply with restrictive measures when transferring funds and cryptoassets under the WCTR.

"Restrictive measures" include individual measures (targeted financial sanctions) and sectoral measures (financial and economic measures or embargoes). They are binding on any person or entity under the jurisdiction of member states.

Both sets of guidelines apply from 30 December 2025.

The answer to last month's question: since launching its Innovation Services, the FCA has supported almost 1000 firms.

This month's question: approximately how many contactless payment transactions were there in the UK in 2023?

• 18.3 billion

• 17 billion

• 48.1 billion

• 45.7 billion.