In the United Kingdom, the process of government oversight for all financial companies is carried out by the Financial Conduct Authority (FCA). Here’s how it works:

🔹 Registration and Licensing

Any financial company wishing to operate in the UK must register and obtain authorisation from the FCA. The process includes:

Submitting an application via Connect, the FCA platform.

Providing a business plan, financial reports, anti-money laundering (AML) policies, and customer protection measures.

Conducting a Fit and Proper Test to assess the integrity and competence of the company's management.

🔹 Supervision and Monitoring

Once licensed, the FCA continuously monitors companies’ activities:

Requiring regular reports (FINREP, COREP) on a monthly, quarterly, and semi-annual basis, including annual reports.

Conducting stress tests to assess financial stability.

Carrying out unannounced inspections and requesting documentation (without prior notice of the physical visit to the company’s office).

🔹 Identifying Violations and Sanctions

If a company breaches the rules, the FCA may:

Impose fines (e.g., for misleading advertising or weak AML controls).

Restrict operations for a short or extended period, up to revoking the licence.

Add the company to a warning list, limiting its market activities, including cryptocurrency markets.

At the request of Interpol, the FCA may freeze company accounts, including those of clients and executives, or take other actions at its discretion.

🔹 Regulatory Updates and Compliance

The FCA regularly updates its rules based on economic conditions, such as financial crises or legislative changes (e.g., post-Brexit). Companies must:

Update their policies and procedures.

Conduct internal audits.

Appoint a Compliance Officer to ensure adherence to regulations.

The inspection by the Financial Conduct Authority (FCA) can take from several weeks to several months, depending on its type and scale.

Main types of inspections and their timelines:

🔹 Initial inspection (upon company registration) – from 3 to 12 months
FCA reviews the authorisation application, checks documents, and evaluates the company’s compliance with requirements. If additional questions arise, the process may take longer.

🔹 Regular monitoring – ongoing
Companies are required to submit reports monthly, quarterly, semi-annually, and annually. FCA analyses the data and may schedule additional inspections.

🔹 Scheduled inspection – from several days to several weeks
FCA may conduct scheduled inspections, especially for larger or higher-regulated companies (banks, investment funds, cryptocurrency platforms). Inspections may include document analysis, interviews with management, and internal process checks.

🔹 Unscheduled inspection – from several days to several months
If FCA suspects violations, an inspection may be scheduled without prior notice. This may include transaction analysis, document requests, and interviews with executives.

🔹 Investigation of violations – from several months to several years
If serious violations are discovered (e.g., fraud or failure to comply with AML requirements), FCA may conduct a lengthy investigation. In particularly complex cases, Interpol, SFO (Serious Fraud Office), and other regulators may be involved.

Thus, the inspection duration depends on its type: from several days for standard inspections to several years for investigations into serious violations.

The management of financial companies, when undergoing checks by the FCA, typically employs several strategies to minimize potential negative consequences and ensure a high level of service for clients. Here are some examples of how they may act:

🔹 Professional assistance and consultations To pass the check successfully, companies often hire lawyers and consulting firms to help correctly prepare all necessary documents and comply with requirements. This may include:

Assistance with preparing business plans and reports.

Legal advice on complying with AML requirements.

Preparation for meetings with inspectors to avoid mistakes and misunderstandings.

Example: A financial services company hires a law firm to prepare for an unexpected FCA inspection, ensuring that all financial reports and procedures comply with current legislation. This helps avoid sanctions and speeds up the process.

🔹 Transparency and willingness to cooperate During checks, the company must demonstrate full transparency and willingness to cooperate with the regulatory bodies. This includes:

Openly providing all required documents and information.

Direct contact with the inspectors to clarify any issues.

Example: During an FCA inspection of a cryptocurrency platform, the management of the company actively engages with the inspectors, providing full information about transactions and internal AML controls to avoid suspending operations or fines.

Temporary measures to protect clients' interests If the company faces issues related to insufficient documentation or processes, it may take temporary measures to protect clients' interests:

🔹 Temporarily suspending certain operations, such as withdrawals or new registrations, until all violations are rectified.

Notifying clients about possible delays or changes in service.

Example: An investment fund facing an inspection due to reporting violations may temporarily suspend accepting new deposits but guarantees the safety of existing investments and the payment of due dividends.

🔹 Employee training and process improvement It is important for companies to train staff and implement new processes to avoid repeating mistakes in the future:

Developing and implementing new training programs for employees on compliance issues.

Implementing stricter procedures to ensure compliance with AML and other regulatory standards.

Example: After discovering weaknesses in internal control checks, the bank's management decides to conduct additional employee training and improve the transaction monitoring system to prevent similar violations in the future.

🔹 Strengthening customer relations The company's management strives to maintain an open and honest dialogue with clients, informing them about the progress of the inspection and actions being taken. This may include:

Regular updates on the status of the checks.

Explaining how the company is working to improve its processes to provide better service.

Example: An asset trading platform sends notifications to its users that it is undergoing an inspection while strengthening security measures to protect their funds. It explains that these are temporary measures aimed at improving service and ensuring compliance with all legal requirements.

🔹 Applying innovative solutions The company may implement innovative technologies to improve its operations and meet regulatory requirements. This may include using automated systems to monitor transactions and ensure compliance with all regulations.

Example: The implementation of an automatic transaction monitoring system that helps prevent any money laundering attempts and ensures compliance with all FCA requirements. This helps the company avoid sanctions and shows its commitment to adhering to the law.

🔹 Adopting corporate sanctions and correcting errors If mistakes are discovered during the inspection, the company may adopt internal sanctions and immediately correct the situation:

Acknowledging mistakes and actively addressing any shortcomings.

Conducting additional audits and tests to prevent similar issues in the future.

Example: After an unplanned FCA inspection and identification of deficiencies in AML procedures, the company's management conducts an internal audit and introduces new measures for stricter transaction monitoring.

Thus, the management of financial companies in the UK actively works on correcting errors and strengthening trust from clients during the inspection process, demonstrating a willingness to cooperate and comply with all mandatory regulations.