UK regulator issues thinly veiled threat on derisking

The UK Financial Conduct Authority rattled the enforcement sword on 27 April with a statement that it will look at whether firms’ approaches to derisking give rise to “consumer protection and/or competition issues” in the course of its AML work.[1] The regulator says that while the decision to open or maintain a business relationship “is ultimately a commercial one”, banks should recognise that individual customers will carry different risk within broader categories, which should be managed “appropriately”; it enjoins them to “use judgment and common sense” and notes that effective AML risk management “need not” result in wholesale derisking. The same slightly equivocal tone is evident in its observation that the risk-based approach “does not require” banks to treat customers generically. FCA cites money transmitters, charities, and fintech companies as customer groups finding it hard to open or maintain accounts; correspondent banking services are also vulnerable, it notes.