Money Laundering Through Markets

Money Laundering Through Markets: Key Risks and Findings

A recent review of Money Laundering Through Markets (MLTM) by Financial Conduct Authority of UK, highlights growing financial crime risks within capital markets. The report examines suspicious activity trends, compliance weaknesses, and oversight gaps among wholesale brokers, providing recommendations to strengthen anti-money laundering (AML) controls.

Key Findings:

• Rising Suspicious Activity Reports (SARs): Reports using the MLTM glossary code increased significantly, reaching 1,919 in 2023/24, a 49% year-on-year rise.

• Weak Risk Assessments: Many firms fail to fully document business-wide and customer risk assessments (BWRA & CRA), limiting their ability to detect high-risk clients.

• Governance & Oversight Gaps: Some firms lack senior management engagement, leading to ineffective compliance controls.

• Transaction Monitoring Challenges: Existing automated systems struggle to detect MLTM activity, requiring better collaboration between transaction surveillance (TS) and AML teams.

• Limited Information Sharing: Firms underutilize expanded Economic Crime and Corporate Transparency Act (ECCTA) 2023 powers for intelligence sharing.

Wholesale Broker Vulnerabilities:

With 280 regulated wholesale broker firms handling £24 billion in total revenue, their role in capital markets exposes them to exploitation. Global transactions, multi-jurisdictional clients, and high-speed trading create complex MLTM risks. The top non-UK countries where trades originate include France, Germany, the USA, Spain, and Switzerland.

Recommendations for Firms:

• Strengthen customer due diligence (CDD) and risk assessment frameworks.

• Improve transaction monitoring systems (TM) and integrate financial crime detection tools.

• Enhance governance, staff training, and compliance resourcing.

• Increase collaboration with regulators and industry bodies to combat MLTM effectively.

The report underscores the evolving nature of financial crime in markets and urges firms to prioritize AML improvements to safeguard market integrity. Strengthening controls will help mitigate risks and prevent illicit funds from flowing through capital markets.

Read the full report here.

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