In a recent Thematic Review, the FCA identifies shortcomings in the approach taken to anti-money laundering in capital markets [TR19/4] (link below)
This follows the guidance on a risk-based approach for the securities sector published by the FATF in October 2018 which is broader in scope (link below)
The focus of the FCA thematic review is on secondary not primary markets and on equities not fixed income.
‘Brokers can also be used to facilitate … money laundering, if they fail to question or investigate suspicious activity when confronted with it’
[FCA ‘ Dear CEO’ letter 18 April 2019]
The focus in capital markets in combating market abuse has led to a neglect in efforts to counter and report money laundering.
There is widespread confusion between the need to make Suspicious Transaction and Order Reports (STORs) and Suspicious Activity Reports (SARs) with many market participants incorrectly conflating both reports and misunderstanding their distinctive purpose.
A common view is that a STOR is functionally equivalent to a SAR which it is not.