Financial Services: Crime

Mark Williams
To ask the Chancellor of the Exchequer (1) what recent discussions he has had with the Financial Services Authority on infiltration of financial services firms by criminal groups;

(2) what steps his Department is taking to prevent organised criminal groups from infiltrating financial services firms; and if he will make a statement.

Sarah McCarthy-Fry
Ministers and officials meet the FSA on a regular basis to discuss a wide range of issues. As was the case with previous Administrations, it is not the Government's practice to provide details of all such meetings.

The Financial Services Authority (FSA) has a statutory objective under the Financial Services and Markets Act 2000 to reduce the extent to which it is possible for an authorised firm to be used for a purpose connected with financial crime. As part of that remit, the FSA has drawn attention to the financial crime risks posed by inadequate systems and controls for the recruitment of staff.

All directors of financial services firms are required to satisfy the FSA that they are "fit and proper persons" when they apply for authorisation, and on an ongoing basis. The suitability of each individual person who performs a controlled function will be assessed by the FSA under the approved persons regime. In certain circumstances, the FSA may consider that the firm is not suitable because of doubts over the individual or collective suitability of persons connected with the firm.

HM Revenue and Customs (HMRC) also operate a fit and proper test for key individuals involved in the management and ownership of money service businesses and trust and company service businesses that must be registered with them for supervision under the Money Laundering Regulations 2007. If any key individual within the business is not found to be fit and proper, HMRC will not register the business and the business must not operate.