Welcome to the UKGI weekly regulation update service for Aviva ABC brokers

Link(s):

Insurance financial crime controls – multi-firm review | FCA

Context

The FCA has published a financial crime controls review of firms in the insurance sector, setting out the review findings and what insurance firms can do to improve their financial crime systems and controls.  The FCA expects firms to maintain adequate and proportionate policies and procedures to counter the risk that they might be used to further financial crime. They should remain vigilant to evolving risks and invest in appropriate financial crime systems, controls and resources.  The findings will be of interest to all insurers and insurance intermediaries.

Key points to note and next actions

The FCA evaluated the design of firms’ controls against:

• Money Laundering Regulations 2017
• FCA Financial Crime Guide (FCG)
• Senior Management Arrangements, Systems and Controls (SYSC)
• Joint Money Laundering Steering Group (JMLSG) guidance
• Financial Action Task Force (FATF) guidance

The FCA reviewed the design of financial crime systems and controls across a selection of large insurance firms to see how effective they are. We found that they are mostly effective. There are areas, however, for some improvement and firms should follow good practice on risk assessments, client due diligence arrangements and transaction monitoring.

In retail insurance:

• Firms meeting the FCA’s expectations demonstrated strengths in systems and controls for sanctions, fraud risk management, and anti-bribery and corruption.  The areas for improvement identified were risk assessment and policies and procedures.  Our most recent Bulletin sets out practical guidance in relation to financial crime risk assessments.

In wholesale insurance:

• Firms meeting the FCA’s expectations demonstrated systems and controls which were typically either moderate or strong. There was strong effectiveness in anti-bribery and corruption, people and knowledge and sanctions.  The areas for improvement identified were fraud risk management.

The findings are set out under the following headings:

• AML transaction monitoring
• Controls monitoring and testing
• Policies and procedures
• Roles and responsibilities
• Obligations management
• Third-party outsourcing
• Sector-specific findings
• Next steps

In retail insurance, the sector-specific findings included:

• Moderate effectiveness overall in financial crime systems and controls across large retail firms.
• Strengths in sanctions, fraud risk management, and anti-bribery and corruption control. This is consistent with the lower inherent anti-money laundering risks of these products, where financial crime exposure is more likely to arise from fraud and sanctions breaches.
• Risk assessment controls were assessed as weak, primarily due to limitations in evidence provided specific to individual business units.
• Client due diligence controls were weak across most large firms, largely because they had not fully documented their approach. As non-AML regulated entities, the extent of due diligence may be more limited, but best practice is to clearly document the rationale for any differentiated approach.

Link(s):

Wider Implications Framework minutes April 2026

Context

The FCA has published the latest (albeit April 2026) Executives Forum Note for Record in relation to the Wider Implications Framework (WIF).

Key points to note and next actions

The only items of note were:

• Members agreed to close the cost-of-living workstream as a workstream being managed under the WIF.  Members noted that this issue remains a key priority for all organisations, but that members have successfully coordinated and incorporated supporting consumers into BAU work, which they will continue to do on this strong footing.
• The recent work on modernising the redress system provided an opportunity to review how the WIF operates.  WIF members presented proposals to update the WIF and the Executive Forum has agreed the new approach.  More information will be shared with stakeholders in the 2025/26 WIF Annual Report.
• Members agreed the scope of the annual report, which is due to be published Summer 2026.

Link(s):

Re-thinking regulation for the age of AI | FCA

Context

The FCA has published a speech given by Nikhil Rathi, FCA Chief Executive, at techUK’s Agents of Change: Generative and Agentic AI in Financial Services 2026.  Rathi comments that the financial services industry and the regulator are “building the future together”, and that “nowhere is that clearer than on AI”.  Rathi states that, if we are serious about being a leading AI economy, financial services must sit at the heart of our approach.  Only financial services, Rathi said, can provide the investment, infrastructure, and trust that will accelerate AI adoption across the economy.

Key points to note and next actions

• Financial services will be central to making the UK a world-leading AI economy, by providing the capital, infrastructure, and trust needed for AI to scale across the wider economy.
• As AI evolves faster than traditional regulation, the FCA is re-thinking what it means to be an effective regulator, with greater emphasis on competition, collaboration and system-wide risk awareness.
• As AI reshapes markets and increases interconnection, understanding how competition is evolving – and where that may impact resilience – will become more important than ever.
• The speech includes commentary on what scaling looks like, a different approach to regulation (including the regulator’s use of AI), resilience, and how the FCA is supporting innovation.

Link(s):

Achieving our objectives; Supporting our stakeholders: OFAC-OFSI Enhanced Partnership Exchange 2026 – Office of Financial Sanctions Implementation The U.S. and UK Economic Sanctions Authorities: A Comparative Overview – GOV.UK OFAC-OFSI_Comparison_Guide.pdf

Context

In January 2026, the UK’s Office of Financial Sanctions Implementation (OFSI) and the U.S. Office of Foreign Assets Control (OFAC) met in London for the latest in-person exchange under the UK-US Enhanced Partnership.  Today, the OFSI and OFAC are jointly publishing new joint guidance to help businesses navigate important differences and similarities between the UK and U.S. sanctions regimes. The guidance provides a comparative overview, and compares important aspects of the U.S. and UK sanctions regimes, including sanctions lists, licences, record keeping and reporting requirements.

Key points to note and next actions

As the Enhanced Partnership enters its fifth year, the core mission remains clear: sanctions should deliver maximum impact, minimise unintended consequences and be easy to understand and implement, whilst deterring non-compliance.

OFAC and OFSI have worked together to:

• evaluate their parallel mechanisms to enable them to rapidly increase sanctions pressure;
• harness lessons learned from the novel restrictions developed as part of their coordinated response to Russia’s illegal invasion of Ukraine to apply to other scenarios;
• identify typologies and economic impact of sanctions targets to more effectively disrupt concerning behaviour, such as in relation to the shadow fleet;
• review and enhance processes necessary to dismantle sanctions regimes in a structured way, such as in Syria; and
• translate the lessons learned and insights from their global sanctions regimes, such as counternarcotics or illegal migration, to produce new tools and resources that can be applied across shared sanctions regimes.

Link(s):

How the Register of Overseas Entities helps to tackle economic crime – Companies House

Context

Companies House has published a new blog outlining how its Register of Overseas Entities helps to tackle economic crime.  Introduced in 2022, the Register of Overseas Entities plays a central role in ongoing efforts to improve transparency of property ownership and strengthen trust in the UK business environment.  The register helps to identify overseas entities that own land and property in the UK, making it harder to hide illicit wealth behind complex corporate structures.

Key points to note and next actions

The register intersects with enhanced powers introduced through the Economic Crime and Corporate Transparency Act 2023. It contributes to Companies House’s wider work to:

• improve the accuracy and reliability of register data; and
• increase their ability to query and challenge information they believe to be suspicious or misleading.

The article comments on the following topics:

• Why the Register of Overseas Entities matters
• Preventing abuse of UK property
• Supporting intelligence and enforcement
• Building a more transparent system
• Looking ahead