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E-money - Is the FCA going to 'Wield the Whip'?
The FCA in London are making changes and will be starting to undertake more audits, checks and stronger enforcement upon their e-money licence-holders, passporting and passported organisations..
E-money Licence Changes
Recent new financial services legislation in the UK has led to the Financial Conduct Authority (FCA) introducing a Payments Systems Regulator from April 2014. The ECB, and the European Commission are also proposing ways to regulate and police the whole e-money arena, as are the international card schemes. The FCA is now also starting to review and audit the e-money licences they have granted previously and for observance with ALL regulations and also best-practices.
We believe that the FCA have seen that the governance of payment systems, including e-money issuers, is a difficult and continuous task and needs several layers of supervision and oversight in the way that other payment methods have already established (e.g. through the regulations of the international card schemes).
As an e-money licence holder, there is a legal obligation to ensure that your organisation and all of its agents, including passport holders are fully conversant with and engaged in all due diligence in customer selection and identification, transaction/
One of the main legislative hurdles is in meeting the requirements of the Money Laundering regulations for all countries in which an e-money licence holder, and its agents and Passport Holders, operate. Not doing 'what is right' by the European Money Laundering directives is the quickest way of losing money, being fined, suffering crippling bad media attention, or losing a market - or a full e-money licence (which will happen when firms are properly reviewed). Our experiences are that regulators are unforgiving and do not 'give time to correct' matters, but equally that regulators are slow to act, and slow to catch on until things are far too late.
In advance of the FCA performing its own validation on individual license holders (and making high profile examples of those who are not fully compliant), all e-money licence holders need to:
A. Make sure that all their processes, operations and compliance teams are all fully observant of all applicable regulatory requirements, laws and best practices.
B. Make sure that they are confident that their third party agents are ALL also fully compliant?
The first steps are to ensure that e-money licence holders:
1. Determining their current state of preparedness and identify areas for attention and action before the FCA (or other e-money licence granter) requests an onsite review of its business.
2. Review the state of compliance and preparedness of all third party agents or passport-licencees and that they report to you on their level of compliance as it is the principal e-money licence holder that is liable in every way.
3. Co-ordinate its efforts with any international card scheme processing involvement that it has.
Will the FCA 'yield the big whip'? YES - absolutely, but the big question is whether they start doing so now, or whether they will wait until they have 'egg all over their faces'.
RISKSILL - compliance risks
At Riskskill.com the team there, helps businesses avoid €multi-million fines and embarrassing brand damaging mistakes from regulatory non-compliance and process and regulatory mistakes. We also help clear up the mess when we are called in later in the process. But we prefer to help business make sure that none of this ever happens because of strong 'bullet-proof' processes, procedures and management. For more information visit http://www.riskskill.com/