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FSA looks to give flexibility on money-laundering controls

FSA chairman Callum McCarthy says he wants to take money-laundering rules out of the regulator’s handbook, allowing firms to create their own controls.

Revealing the first phase of the FSA’s programme to simplify the handbook and remove unnecessary rules, McCarthy says he wants to scrap or change requirements that are more restrictive than needed to achieve statutory objectives and which do not deliver the benefits to justify the costs.

Consultation paper 05/10 proposes removing the money-laundering sourcebook from the handbook and replacing it with a streamlined senior management, systems and controls sourcebook. This will give senior management responsibility for anti-money-laundering systems and is designed to give firms the flexibility to implement systems in a way that suits them.

The FSA also proposes to streamline the approved persons regime, which requires certain individuals in regulated firms to have express approval to carry on one or more specific controlled functions. Some of the 29 controlled functions will be merged or removed and the need for firms which only deal with whole-sale customers to have app-roved persons status will be removed.

The FSA hopes this measure will make controlled functions simpler and less costly to administer. The consultation paper is seeking feedback on the FSA’s efforts to simp- lify the retail conduct of business regime.

The FSA says it wants to take advantage of changes stemming from the new markets in financial instruments directive, which comes into force in 2007, to review and simplify the sourcebook as a whole.

McCarthy says: “We are determined to be more rig-orous about the costs and burdens that regulation imp- oses on firms.

“We are simplifying our handbook requirements and the way we express them, which will help all firms but part- icularly smaller ones which do not have access to exp- ert advice.”


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