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FCA enforcement notice:- good and bad practices on Business-Wide Risk Assessment (BWRA)

18/03/2025

The Financial Conduct Authority declined Zeux Limited’s crypto registration citing significant risk of harm. The FCA Decision Notice provides one of the most detailed descriptions of regulatory expectations and good and bad practices published by the FCA, and it is a MUST READ.

The anti-money laundering controls put forward by ZEUX LIMITED fell short of legislative requirements.

The application showed:

  • Failure to understand, identify and document risks.
  • Failure to consider the National Risk Assessment sets out key money laundering and terrorist financing risks in the UK.
  • Customer risk assessment enhanced due diligence and suspicious activity reporting failures.

More specifically, concerning failings in Business-wide Risk Assessment (BWRA), it notes:

  • Failure to note all the risk factors - 
    • Limited consideration was given to the customer’s or geography risk factors,
    • No consideration was given to the risks posed by the products or services and delivery channels.
  • Failings in BWRA methodology –
    • No evidence of a BWRA methodology beyond a guidance matrix showing how the scorings have been developed.
  • Failure to understand how to perform a BWRA –
    • No evidence of control effectiveness testing in place to help derive the overall residual risk rating. The inherent risks are clustered and not easy to follow.
  • Failure to understand, identify, differentiate and document
    • Risks - controls or controls failings classified as inherent risks.
  • Failure to consider the National Risk Assessment –
    • No evidence that the BWRA gives any, or any adequate, consideration to the NRA.

COMSURE has observed some of these shortcomings when conducting independent financial crime audits. Highlighting these earlier can save firms from future regulatory scrutiny.

If you want to learn more about Comsure services, please contact

Mathew Beale - Chartered FCSI

Principal & Director - Comsure Compliance Limited, Comsure Technology Limited, Comsure Mauritius (the "Comsure Group of Companies")

mathewbeale@comsuregroup.com

T (Jersey) +44 1534 733-588 /+44 7797 747-490

T (Mauritius) +230 214-6487 / +230 5717-6907

 

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As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.  

news disclaimer -

As well as owning and publishing Comsure's copyrighted works, Comsure wishes to use the copyright-protected works of others. To do so, Comsure is applying for exemptions in the UK copyright law. There are certain very specific situations where Comsure is permitted to do so without seeking permission from the owner. These exemptions are in the copyright sections of the Copyright, Designs and Patents Act 1988 (as amended)[www.gov.UK/government/publications/copyright-acts-and-related-laws]. Many situations allow for Comsure to apply for exemptions. These include 1] Non-commercial research and private study, 2] Criticism, review and reporting of current events, 3] the copying of works in any medium as long as the use is to illustrate a point. 4] no posting is for commercial purposes [payment]. (for a full list of exemptions, please read here www.gov.uk/guidance/exceptions-to-copyright]. Concerning the exceptions, Comsure will acknowledge the work of the source author by providing a link to the source material. Comsure claims no ownership of non-Comsure content. The non-Comsure articles posted on the Comsure website are deemed important, relevant, and newsworthy to a Comsure audience (e.g. regulated financial services and professional firms [DNFSBs]). Comsure does not wish to take any credit for the publication, and the publication can be read in full in its original form if you click the articles link that always accompanies the news item. Also, Comsure does not seek any payment for highlighting these important articles. If you want any article removed, Comsure will automatically do so on a reasonable request if you email info@comsuregroup.com.