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FCA Handbook – whistleblowing requirement

Fca handbook whistleblowing requirements - intelligence & risk solutions

A financial firm must establish, implement and maintain appropriate and effective arrangements for the disclosure of reportable concerns by whistleblowers.

FCA Handbook

Let’s face it. Whistleblowing isn’t everybody’s cup of tea. We know that because we’re trying to sell it to businesses. Many don’t want to know. Shockingly even more don’t perceive a risk of not having a system in place. And this includes finance firms in the crosshairs of criminals.

Tell that to Ben Donaldson who reports…

‘In the first six months of this year (2023) ruthless criminals had already stolen more than half a billion pounds through fraud. In addition to the financial losses, these crimes often involve callous manipulation of the victim(s) which can cause psychological and emotional harm. As the UK Finance report shows, criminals are increasingly using social media, online platforms, texts, phone calls and emails to deceive victims into giving up their personal details and their money.

The financial services sector continues to lead the fight against these awful crimes. We are also currently the only sector that reimburses victims. However, it is impossible to reimburse the human impact of these crimes: we must prevent it from happening in the first place. The only way we will prevent fraud is if other sectors do much more to help us deal with the criminality.”

Ben Donaldson MD Economic Crime at UK Finance.

In other financial crime news

A finance worker working for a global finance firm was duped into paying $25 million to criminals after they ‘deep faked‘ him into believing he was talking to the firm’s finance director. Hong Kong police report it was the largest deep fake they had seen to date. But how did the criminals know what information to present to make the director look credible? Insider information.

And yet these examples fail to reach into the psyche of finance firms who, despite being a clear and obvious target, fail to implement systems to protect their clients and themselves.

After 26 years fighting the world’s criminals (across three continents and encompassing everything from money laundering to murder to terrorism) I simply cannot conceive why some firms are lax about their responsibilities. I have yet to ever see a criminal investigation that doesn’t involve a human passing information to prosecute or inform on the criminal. So why should it be a battle for my team to convince finance firms to deploy reporting mechanisms to let the firm’s eco-system report things to them? This is an obvious way to not only uncover nefarious activity but also to prevent it. The more barriers firms put in the way of criminals, the less likely they are going to try and circumvent them.

I have also yet to see a single large scale money laundering ring that doesn’t involve insiders facilitating the money movements. From Danske Bank in Estonia to 1MDB in Malaysia, money laundering nearly always involves insiders facilitating the money movements.

In every financial crime investigation I have led, human covert information is critical to uncovering the crime. In fact, human sources internal to firms help to detect twice the crime that the police and auditors do put together. So for firms relying on audits, thinking they’re safe, think again.

If you want to provide a barrier to prevent criminals operating in your firm, contact us. We don’t supply just software. We supply criminal expertise.

Author Bio:

Andy Parr is a retired senior criminal detective that has led investigations into every type of criminal investigation. Working in Afghanistan he mentored senior officers in the art of intelligence and undercover operations. In the Cayman Islands he qualified as a Anti-money laundering specialist. Recognising the power of knowledge, he built HX5 to put it into the hands of firms that want to protect their most prized asset. Their reputation.