Tackling Money Laundering in UK Capital Markets: FCA Calls for Stronger Compliance Measures

Tackling Money Laundering in UK Capital Markets: FCA Calls for Stronger Compliance Measures

According to an article by White & Case, the UK’s capital markets have become a significant money laundering risk, creating challenges for regulators and financial institutions. The Financial Conduct Authority (FCA) has issued an updated Money Laundering Through the Markets (MLTM) Report, emphasizing the need for stronger systems, better compliance controls, and increased adoption of artificial intelligence (AI) to detect illicit activity.

London’s global financial status brings high trade volumes, making it easier for bad actors to conceal illicit transactions within legitimate market activity. The FCA’s report builds on prior national risk assessments, acknowledging progress in understanding MLTM risks while highlighting persistent gaps. 

Participation in initiatives like the Joint Money Laundering Intelligence Taskforce (JMLIT) has enhanced public-private collaboration, yet financial firms must do more. The article says that the FCA expects regulated entities—including investment banks, exchanges, and brokers—to act as gatekeepers, filing Suspicious Activity Reports (SARs) and maintaining effective monitoring. The rising number of SARs indicates improved detection, but shortcomings in risk assessments, transaction monitoring, and customer due diligence remain.

The FCA underscores the necessity of a risk-based approach, requiring firms to efficiently identify, investigate, and report suspicious activity. AI is poised to play a growing role in this effort. While some firms have adopted AI-driven monitoring, the FCA finds progress lacking and urges broader implementation.

With evolving compliance demands and increasingly sophisticated financial crime tactics, the article suggests firms must prioritize robust anti-money laundering (AML) frameworks. An updated risk assessment and investment in AI-enhanced controls will be critical to managing MLTM risk, future-proofing compliance, and meeting regulatory expectations.