FCA has published an anonymised warning notice it has issued to a firm in relation to financial crime failings in some of its cum/ex trading. The notice relates to activities during 2015, and FCA found that, for offshore company clients, including from the BVI and Cayman Islands, and many individual US 401k pension plans previously unknown to the firm, there was a high scale and volume of transactions, and the clients had no apparent access to funds to settle them. Also they were controlled by a small number of individuals, some of whom had worked for entities that had introduced the business to the firm.
FCA has found breaches of Principle 2 and 3, as the firm had inadequate systems and controls to identify and mitigate the risks of being used for money laundering, and did not exercise due skill, care and diligence in applying its AML policies and procedures and in failing to assess, monitor and mitigate the risks these clients posed.
The firm now has the opportunity to make reference to the RDC and potentially the Tribunal.