What is FCA Regulation for Money Transfer Firms Operating in the UK?
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FCA Regulation for Money Transfer Firms Operating in the UK

Updated on April 12, 2022 09:30 am
Financial Conduct Authority

You can tell which money companies are safe to use, if they're FCA regulated. The FCA (Financial Conduct Authority) is a British independent organization that  is one of its industries working to protect consumer affairs. The company has the power to investigate, make and pass regulations designed to protect consumers, as well as to implement best practices between financial firms and in the finance sector. It can also penalize if its regulations are violated.

The overall objectives of the FCA are to uphold the integrity of Britain's financial system, as well as to generate healthy competition between financial providers, while protecting consumer interests. The FCA was built on statutory requirements of the Financial Services and Markets Act 2000 and came into effect through the Financial Services Act on April 1, 2013 as a result of the 2008 crisis. Modifications obligated the financial sector to manage and contain risks more effectively.

British-based firms outside the UK are not FCA-regulated, although firms registered outside of the UK but operating in Britain need to be FCA-regulated.

The FCA and Remittance

The FCA passes regulations that vary in strictness, depending on situations. Organizations, such as money transfer operators, foreign exchange brokers and banks, receive the utmost monitoring, since they deal with situations that involve the utmost care, such as loaning, taking deposits and transferring money from one account to another or worldwide.

Regulations include the following: Money transfer operators need to maintain a certain level of capital if their turnover exceeds EUR3m a month. They also need to meet rules on fair pricing, meet time requirements on executing transfer orders, and follow protocol for intimidating and detecting money laundering and other financial crimes.

The most important rule is that the company needs to insure any amount that is more than $60 and to keep it in silo, so that if the company goes bust, your money remains.

Companies are monitored by fines and threat of closure. If you suspect foul treatment, you can turn to the FCA, as well as the Financial Ombudsman Service, a dispute resolution service, and the Office of Fair Trading. If the company fails, you may be entitled to compensation.

In the last few years, migrants working in Britain have sent over $20 billion USD (16bn) a year to their families and connections. A range of money transference companies have mushroomed to service this remittance flow, but it's crucial to establish that the money transfer remittance company you're considering is FCA-regulated. While no longer a niche market, the operators and providers are not the same household name as major banks are. Look for the FCA authorization, or registration, or consult the FCA Register for a list of names. 

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