The Financial Conduct Authority (FCA) has launched a crackdown on the practice of auditing which is taking place across the world.
The regulator has launched an audit unit to look at what banks are doing to prevent fraud and misconduct and is looking at whether to make them a “target” for fraud and theft.
This means the auditing is meant to identify which banks have been “operating as if they are compliant with the law and are in fact breaking it”.
Banks can’t simply audit themselves The FCA has launched the auditable bank audit unit, which will look at how they have been auditing customers, the quality of their auditing, and how they are auditing other banks.
We will work with the relevant regulators to identify compliance that is not sufficient to warrant a referral to the FCA. “
We are looking at how to identify banks that are operating as if their compliance with these requirements is sufficiently high to warrant the use of this type of audit.”
We will work with the relevant regulators to identify compliance that is not sufficient to warrant a referral to the FCA.
“This will enable us to ensure the banks comply with the requirements and, where necessary, make changes to improve their performance.”
Banks must be “operational” and in compliance The audit unit will also look at whether banks are “operationally” in compliance with their banking laws and regulations, and will look into how they implement the new regulations.
Banks will have to ensure that any actions taken in the run up to a breach of the new rules, including any monitoring of internal systems, are “properly implemented and implemented in a way that ensures the Bank’s financial system remains safe and sound”.
This means that any action taken in response to a financial offence or a breach will need to be “proportionate and necessary”.
In addition, the FACA will also examine whether the banks have a process for identifying breaches of the Bank Act.
The FACA is also looking at the compliance of “banks that have been acquired by new companies”.
The Faca will also “review and consider any actions that may be taken by banks which have been bought by new competitors or acquirers in order to ensure they remain in compliance” with the new legislation.
Banks that have “become subject to new or existing legislation” in the past year will be “subject to scrutiny” for their compliance.
If banks are found to have “engaged in or been involved in financial fraud, misappropriation of funds, or other serious financial offences”, the Faca may also look into whether the bank is “operatively compliant with all relevant statutory or regulatory requirements”, or is “in a position to comply with all requirements in its statutory or regulated functions”.
The Financial Services Authority (FSA) has also launched a similar audit unit which it will be launching in 2018.
The FSA will also work with regulators to “make sure that the FCO is aware of any compliance problems or breaches in the banking sector that it can take action against”.
Banks that are under the scrutiny of the FSA will be given “support to improve compliance with financial services requirements”.
Banks will also have to “conduct annual and monthly reviews” of the quality and effectiveness of their compliance processes.
If there is a problem that warrants an audit, “the FSA will provide the banks with the opportunity to review the audit”.
Banks and regulators will also be able to share information about breaches of their laws and regulatory requirements.
Banks must ensure that “they are not a target” for fraudulent or non-compliance The FSA and the FCEA have announced that banks will not be able “to operate as if the compliance required to be in place at any point in time is sufficient to ensure their financial systems remain safe and secure”.
In fact, banks will have “to maintain and maintain compliance at all times, or risk being identified as a target for fraud or theft”.
Banks must “exercise caution in their business dealings” and “take action against any breaches” that occur.
Banks “should not rely on the compliance requirements to achieve their financial objectives” and will be forced to “reconsider” how they deal with breaches.
Banks are also “expected to maintain, and improve, their ability” to ensure “the integrity of the financial system”.
Banks are “required to implement the standards of the FICO standards” as part of their “financial obligations”.
The FSA is also working with regulators on “further guidance on the role of the UK financial regulator” to be released in 2018, and “making the Financial Services Act compliance requirements more effective and consistent across the financial sector”.