Regulatory Updates July 2025

 

Our regulatory newsletter aims to provide insight into the previous month’s changes and updates which may have an impact on your firm. At Objectivus, we are well positioned to provide context and support for firms working to understand such changes.

In this issue we cover:

• FCA sets faster targets for authorisations
• Rachel Reeves’ Mansion House Speech
• FCA and FINMA open cross-border access for UK and Swiss firms
• Barclays fined £42 million for financial crime failures
• Monzo fined £21 million over AML breaches
• The FCA publishes ‘Market Watch 82’
• Updated FCA guidelines on PEPs

 

FCA sets faster targets for authorisations

The FCA announced new accelerated service level targets to reduce the time firms and individuals spend waiting for authorisations. These targets cover critical applications including variation of permissions, approvals for senior managers and certified persons, and appointed representative registrations. The FCA acknowledged that quicker authorisations support business growth, market innovation and UK competitiveness. Performance against these targets will be published to provide greater transparency and accountability. This move responds to industry feedback and aims to cut regulatory delays while maintaining rigorous standards for market entry.

For firms, this means a potentially faster onboarding process and reduced waiting times when expanding or making changes to regulated activities. Firms should be prepared for a more dynamic authorisation environment that rewards preparedness and completeness.

 

Rachel Reeves’ Mansion House speech

Chancellor Rachel Reeves delivered the Mansion House speech, unveiling the government’s new Financial Services Growth and Competitiveness Strategy, also known as the ‘Leeds Reforms’. This ambitious package focuses on modernising UK financial services regulation to better support economic growth. Key proposals include a review and potential easing of the Senior Managers and Certification Regime (SMCR) to reduce burdens on firms, revisiting ring-fencing requirements on banks to unlock capital, and encouraging long-term investing by permitting long-term asset funds within stocks and shares ISAs from April 2026. The reforms also aim to boost housing affordability through mortgage market adjustments. This strategy marks a significant shift towards growth and innovation regulation.

These reforms could signal lighter compliance obligations under SMCR, new product opportunities through long-term asset funds in ISAs, and a more flexible regulatory framework supporting growth and innovation. Compliance teams should monitor forthcoming consultations closely to prepare for changes and adapt governance frameworks accordingly.

 

FCA and FINMA open cross-border access for UK and Swiss firms

Following the agreement reached between the UK and Switzerland last year, the FCA and the Swiss Financial Market Supervisory Authority (FINMA) launched a new pathway for regulated firms to offer cross-border services between the two jurisdictions. Eligible UK and Swiss firms can submit expressions of interest for authorisation to provide services remotely without the need for a local physical establishment. This arrangement is designed to reduce barriers to market entry, enhance financial sector collaboration, and promote trade while maintaining strong regulatory standards and oversight. The new regime is expected to benefit firms engaged in banking, investment services, and asset management sectors.

For firms, this opens a streamlined route to access the Swiss or UK markets, reducing the need for costly local setups and enabling quicker service provision to clients across borders. Firms considering expansion should evaluate the eligibility criteria and submission deadlines to take advantage of this opportunity.

 

Barclays fined £42 million for financial crime failures

Barclays was fined £42 million by the FCA for long-standing weaknesses in its financial crime controls, particularly relating to transaction monitoring and customer due diligence. The case highlights the regulator’s focus on ensuring robust systems are in place to prevent illicit activity within large financial institutions.

The fine related to two distinct failings, with one involving WealthTek, which was not authorised to hold client money and another involving Stunt & Co, a client linked to funds later identified as part of a large-scale money laundering operation. Barclays failed to collect sufficient information on WealthTek before onboarding and delayed reviewing its exposure to Stunt & Co despite external enforcement actions were publicised. The FCA noted Barclays’ cooperation and voluntary payment to WealthTek’s clients, which contributed to a reduction in the final penalty amount.

 

Monzo fined £21 million over AML breaches

Similarly, Monzo was fined £21 million for historical anti-money laundering failures between 2018 and 2020, including delays in assessing customer risk and shortcomings in automated monitoring systems.

The firm failed to carry out adequate customer due diligence, risk assessment and monitoring transactions, with a customer base expanding from 600,000 in 2018 to 5.8 million in 2022. Monzo also breached a voluntary restriction on onboarding high-risk customers, during which more than 34,000 high-risk individuals were accepted.

The FCA acknowledged that while Monzo has since made improvements, the breaches exposed serious vulnerabilities in its compliance framework during a period of rapid growth. Subsequently, the FCA reduced the fine by 30% in recognition of Monzo’s early settlement and cooperation.

 

The FCA publishes ‘Market Watch 82’

The FCA issued Market Watch 82, reminding firms of their obligations to maintain effective arrangements relating to transaction reporting. The Market Watch focuses on the observations from remedial actions and processes taken when a transaction reporting breach has occurred.

Drawing on 241 breach reports from the first quarter of 2025, the FCA identified the following common themes in the root cause(s) for delayed remedial work:

• Siloed teams, dilution in the ownership of remedial actions and lengthy approval chains slow down decision making.
• Insufficient resourcing to handle remedial work and competing business priorities result in slower and/or delayed response times to breaches.
• Focusing on fixing the issue in hand rather than getting to the root cause leads to the issue reoccurring.
• A reactive compliance culture rather than a proactive culture results in firms addressing issues only when necessary.
• Lack of accountability means remedial work is not treated with the urgency it may require and results in a loss of momentum in fully remediating the issue.

The FCA goes on to provide case studies on the common causes for delayed back reporting as well as their observations and good practices from their review of breach notifications. Firms are encouraged to review their transaction breach processes and procedures to ensure they align with the FCA’s comments and guidance in this Market Watch.

 

Updated FCA guidelines on PEPs

The FCA has published FG 25/3, an updated guidance on the treatment of politically exposed persons (PEPs) under the Money Laundering Regulations 2017. The guidance reinforces the expectation that firms should apply a proportionate and risk-based approach when identifying PEPs.

Key updates set out in the Guidance include:

• Confirmation that domestic PEPs should be treated as lower risk than non-domestic PEPs, unless other risk factors apply.
• In respect of signing off PEP accounts, confirms that “senior management” doesn’t have to mean the MLRO.
• Confirmation that non-executive board members of civil service departments are not PEPs.

Firms are expected to assess each case relating to PEPs based on the specific role and level of influence, avoid automatic application of enhanced due diligence and ensure decisions are clearly documented.

This guidance replaces FG17/6 and is intended to reduce the necessary barriers for low-risk individuals while supporting effective financial crime controls.

 

Please reach out to info@objectivus.com if you have any questions or require further clarity on any of the points raised.