Context
The FCA has published a summary of its findings from a multi-firm review of Customer Due Diligence (CDD), Enhanced Due Diligence (EDD) and ongoing due diligence controls, which it conducted in 2025. The review was part of wider financial crime supervisory work in support of the 2025-30 strategy (PDF), which covered a range of portfolios and firm types with the aim of raising standards and sharing practical insights.
Key points to note and next actions
The FCA review involved the Asset Management, Crowdfunding, Wholesale banking, Contracts for difference and non-bank lenders, evaluating 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 findings, and examples of good and poor practice, are grouped under the following headings:
- Policies and procedures: Some firms distinguished between CDD and EDD for higher‑risk customers like PEPs, incorporating the January 2024 domestic PEP changes, but many policies lacked practical detail. Gaps were common around alternative ways to identity customers that couldn’t provide usual forms of identification; and frequency of periodic reviews and what was expected in case of event‑driven reviews.
- CDD and EDD processes: Most firms adopted a risk‑based CDD approach and applied enhanced checks to higher‑risk customers. Some firms documented each stage of their EDD processes, including senior management oversight. Some firms failed to evidence or record key information relating to EDD actions, or specify where certain types of customer would require senior management approval.
- Compliance monitoring and audit: Most firms had compliance monitoring and audit arrangements in place, but their depth and independence varied. One firm conducted regular, proportionate reviews and another included independent third‑line testing. Some firms lacked independent assurance, with one firm’s staff onboarding customers and then performing second-line assurance on their own onboarding activity, raising concerns about impartiality and effectiveness.
Next steps: Firms are encouraged to consider the FCA’s findings and suggestions and to continue to review CDD controls.