FCA has fined the TJM Partnership, which is now in liquidation, £2,038,700 for financial crime compliance failings in cum-ex trading business. This is the third fine in this area, and the largest.
FCA found the firm did not have in place adequate procedures to identify and mitigate the risk of being used to facilitate fraudulent trading and money laundering over a period of nearly 2 years when trading on behalf of clients of the Solo Group. The trading showed a circular pattern and involved around £80bn worth of trades in Danish and Belgian equities and appeared to have been carried out to allow the arranging of withholding tax reclaims in those countries. The firm made £1.4m from the trades.
Further, it did not identify the financial crime risks relating to other Solo Group clients, in relation to transactions that had no apparent economic purpose except to transfer windfall profits of over €4m among its clients. The firm also accepted payment from a third party without carrying out proper due diligence.
The level of fine reflected the multiple issues, and also a 30% discount.