Daily Compliance Brief — UK FCA Highlights Transaction Monitoring Weaknesses in Thematic Findings

February 19, 2026

Signal

The UK Financial Conduct Authority (FCA) has published supervisory observations identifying recurring weaknesses in firms’ transaction monitoring arrangements. The findings focus on ineffective scenario calibration, insufficient data integration, and weak governance over model tuning and alert backlogs.

The regulator noted that, in several cases, monitoring frameworks failed to reflect firms’ evolving risk profiles, particularly in higher-risk customer segments and complex cross-border activity. The communication reinforces ongoing supervisory attention to monitoring effectiveness rather than mere system presence.

Why it matters

For compliance teams, the message is clear: transaction monitoring must be demonstrably risk-based, periodically recalibrated, and supported by robust management information. Static scenarios and excessive alert volumes without qualitative effectiveness testing increase supervisory risk.

Firms should reassess scenario design, data completeness, model validation processes, and escalation oversight. Documentation evidencing governance challenge, threshold adjustments, and resource adequacy will be critical in the event of thematic reviews or enforcement scrutiny.