The letter to wholesale brokers specifically references the link between anti-money laundering controls and market abuse, as well as four Market Watch newsletters, including Market Watch 69 which outlines the benefits of having effective surveillance systems in place and a comprehensive, accurate and up-to-date market abuse risk assessment.
The UK regulator explains the importance of having a good culture to complement a robust control framework and detective and monitoring controls, including “trade and communication surveillance.” The expectation is that firms receiving the letter should agree actions and next steps by the end of March 2025.
Also in relation to financial crime and market abuse, the FCA published a paper last week entitled ‘Assessing and reducing the risk of Money Laundering Through the Markets (MLTM)’, which the FCA expects firms to read in full.
The MLTM paper, which applies to investment firms more broadly, highlights: the advantages of an integrated approach to market abuse and money laundering surveillance; the benefits of trading surveillance alerts being considered alongside KYC and other information; and that Suspicious Activity Reports (SARs) often originate from Trade Surveillance alerts and Suspicious Transaction and Order Reports (STORs).