Quality assurance review of customer onboarding to support lifting of VREQ

Our client was the dual regulated UK Branch of an International Asian Bank supporting companies looking to invest and/or expand in the UK and Asia.

The Firm had been subject to a multistage Financial Crime Skilled Person review and had completed the majority of the remediation activities. The final outstanding element was that the Firm still needed to demonstrate the Operational Effectiveness of their onboarding activities to enable the FCA to remove the VREQ restriction that was in place.

Pathlight have undertaken multiple such assignments over recent years – both as a Skilled Person and supporter of remediation programmes – and were appointed to assist the Firm.

Our work consisted of undertaking a Quality Assurance review of each new client application prior to contractual onboarding. To undertake this we prepared a ‘Customer File Review Template’ that would allow us to evidence that the Firm had fulfilled their own policies and procedures and that the onboarding had been undertaken in accordance with the relevant regulations.

For each client application our Financial Crime team reviewed and assessed for evidence of:
• Compliance with Policy and Procedure content standards and relevant regulations;
• Clear and accurate application of a Customer Risk Assessment;
• Appropriate levels of CDD and EDD (including Source of Wealth and Funds);
• Evidence of PEP, Sanctions and Adverse Media screening, discounting and escalation as appropriate;
• Evidence of escalations / waivers if required;
• Appropriate levels of management approval / sign off.

Our team identified any exceptions as they arose and evaluated completion prior to signing off the file. The templates were converted into summary reports that the Firm was able to provide to the FCA by way of demonstrating progress and compliance.

We undertook the review of a series of files as and when they were ready. We provided the Firm with ongoing feedback so they could make timely enhancements during the engagement.

The Firm was able to demonstrate the Operational Effectiveness of their onboarding activities and the VREQ restriction was removed. Ultimately this was completed over a smaller sample of files that the FCA had originally requested.