Regulatory gap analysis: FCA multi-firm review of CDD processes and controls

The FCA’s issued its long awaited customer due diligence (CDD) multi-firm review and the message is clear: standards across the industry are falling short.

The FCA found that firms are not consistently meeting the requirements set out in Regulations 28–33 of the Money Laundering Regulations (MLRs). These include failures relating to customer identification and verification, ongoing monitoring, enhanced due diligence (EDD), and the application of appropriate risk-based measures.

These are the same issues that continue to surface through regulatory reviews, assurance work, and Skilled Person engagements. However, this review is a clear signal that firms need to move beyond “tick-box” compliance and take a more critical look at how their CDD frameworks operate in practice. It’s not just about having policies in place, it’s about ensuring they are clear, complete, and aligned to regulatory expectations and that they are applied consistently across the business.

Firms should be asking whether their approach to CDD is genuinely risk-based, whether EDD requirements are well-defined, and whether ongoing monitoring and review processes are robust and effective.

To support this, we’ve developed a practical Regulatory Gap Analysis aligned to the FCA’s findings. It enables firms to assess their CDD framework against regulatory expectations and quickly identify where key weaknesses and potential breaches may exist.

Avyse Partners are an official content partner of the International Compliance Association. The ICA is the leading professional body for the global regulatory and financial crime compliance community.  ICA Members can gain access to Member-only content developed in partnership with Avyse that shares insights and best practice to help you meet the challenges of today and tomorrow.  Not yet an ICA Member? Join here