The recent JFSC public statement and civil penalty issued by the JFSC to Lloyds Bank Corporate Markets Plc, may not at first glance be considered relevant to all supervised persons to consider if there are any learning points for their operations.
Whilst the public statement relates to correspondent banking services being provided, it raises the question as to whether the services being provided to your clients are fully captured and understood. All supervised persons will have relevant procedures and controls in place for the core services they provide, however they should also consider whether there are any ad-hoc/tailored services provided that may have been missed being captured in the “core product/services” procedures.
The JFSC’s public statement is a reminder to ensure that all products and services (or variances to these) are captured, documented, and understood.
- Have you validated all the products/services (including variances) being provided?
- Has an assessment of each product/service been completed to understand:
– the nature of the services being provided,
– the regulatory and statutory requirements,
– any consideration of AML risk factors and appropriate application of EDD
– the operational risks
- Are there relevant procedures and controls in place for each product/service? Do they capture relevant regulatory requirements (for example EDD measures)?
- Do your existing ongoing monitoring/transaction monitoring controls capture (where applicable) the product/service?
- Does the BRA document the risks and consider the mitigating controls?
- Have staff been trained on the relevant procedures and controls?
- Has compliance monitoring testing been conducted on each product/service?
- Do your terms of business capture the product/service?
The JFSC’s public statement is a useful prompt to all supervised persons to check they fully understand all products and services provided and have the relevant internal systems and controls in place.