The Prudential Regulation Authority (PRA) is one of the UK’s two principal financial regulators — the other being the Financial Conduct Authority (FCA) — and operates as a subsidiary of the Bank of England. The PRA was created by the Financial Services Act 2012, which dismantled the previous single-regulator model under the Financial Services Authority (FSA) and replaced it with a twin-peaks structure. The PRA’s primary responsibility is the prudential supervision of systemically important financial institutions — principally banks, building societies, credit unions, insurers, and major investment firms — focusing on their financial safety and soundness rather than on the conduct of their business with customers. In simple terms, while the FCA asks whether a firm is treating its customers fairly and operating with integrity, the PRA asks whether the firm is financially resilient enough to withstand stress and whether its failure would pose a risk to the broader financial system.
Although the PRA is not a dedicated AML supervisor — that role falls to the FCA for most financial sector firms — it is directly relevant to financial crime compliance in several important respects. The PRA’s governance and internal controls requirements, set out in its Rulebook and supervisory statements, include expectations around the management of financial crime risk at board and senior management level. The PRA’s Senior Managers and Certification Regime (SMCR), operated jointly with the FCA, assigns individual accountability to named senior executives for specific areas of a firm’s operations — including compliance and financial crime — meaning that a failure of AML governance can result in personal regulatory action against individually named senior managers, not merely against the institution. The PRA also cooperates closely with the FCA on dual-regulated firms where financial crime failings have both prudential and conduct dimensions.
