Category Financial Crime
JMLSG has published updates to its guidance in respect of asset finance and syndicated lending. The guidance: in respect of asset finance, describes the main types of asset finance and discussed when its provision involves regulated activities for the purposes of FSMA. It then sets out key features that can decrease or increase money laundering […]
The NCA and Transparency International have warned of the risks Brexit presents of the UK being used as a vehicle for money launderers and corruption. Responding to the NCA’s identification of the risks, TI said: the UK should speed up plans to introduce a public register of the real owners of overseas companies that buy […]
OFSI has published a list of FAQs for importers and exporters focussing on the application of financial sanctions. It notes the separate regimes and potentially the need for separate licences that may be required from OFSI in relation to financial sanctions and the Export Control Joint Unit for trade sanctions. It notes some key risks […]
The Solicitors’ Regulation Authority has fined Anthony Gale, partner at Maurice Smiths solicitors who was also its compliance officer and MLRO, £10,000 for various conduct failings in relation to a number of mortgages. Mr Gale acted on a number of conveyances at the instruction of third parties without confirming the instructions with the client. The […]
The Council has formally adopted MLD5 in its meeting of 14 May. The changes to MLD4, already agreed between the Council and Parliament, include: greater transparency of beneficial ownership of companies and trusts; addressing the risks of prepaid cards and virtual currencies; greater cooperation between FIUs; and enhanced checks on transactions involving high-risk countries. The […]
The “Ping-Pong” stage of the Sanctions and AML Bill will take place on 21 May.
Transparency International has welcomed a cross-party amendment to the Sanctions and AML Bill that will require all British Overseas Territories to introduce public registered to reveal the individuals behind companies formed in their jurisdictions. If they do not do so, a draft Order in Council should be prepared no later than the end of 2020 […]
NCA is to conduct a pre-investigative evidential review into allegations of fraud, money laundering and corruption in relation to the business of the then HBOS Impaired Assets Division in London and the South East, that went wider than the investigation which resulted in prosecutions last year.
In support of the Sanctions and Anti-Money Laundering Bill, the FCO has published out a Policy Note which describes the government’s intended approach to: licensing applications in relation to asset freezes, including how it intends to deal with applications it can foresee, general licenses and common grounds for application; maintaining a similar framework to the current one […]
BEIS is consulting on reforms to the laws governing Scottish Limited Partnerships to address the illegitimate uses to which some SLPs have been put. The Government has found evidence that SLPs have been exploited by money launderers, including one scheme that used over 100 SLPs to move up to $80bn. The proposals include introducing safeguards […]
Ahead of its adoption, the Council and Parliament text of MLD5 was published on 26 April. After formal adoption it will need to be published in the Official Journal, and it will come into force 18 months after that. Austria and the Commission both expressed disappointment that the transparency provisions were not more onerous.
FATF has updated on recent discussions with the FinTech and RegTech sectors. It has recently focused on: using digital IDs for CDD. Institutions increasingly use this, and discussions focused on whether there is any need for change or clarification in the FATF recommendations to support the practice; and the regulatory landscape for crypto-assets. Participants stressed […]
Robert Barrington, Executive Director of Transparency International, has written to David Green at the SFO warning that DPAs, while a useful tool that TI supports must nevertheless be used properly, so as not to become a “soft option” for those guilty of corruption. TI is concerned that discounted DPA settlements will give that impression. The […]
As part of the proposed process of transferring the regulation of Claims Management Companies to the FCA, HM Treasury is consulting on draft regulations that will form part of a final statutory instrument creating a new framework of regulation for Claims Management Companies (CMCs). The draft regulations set out the proposed permissions that CMCs will […]
Philip Hammond is to use the G7 and IMF meetings in Washington this week to call for: international agreement on denying North Korea access to finance. He wants all jurisdictions to push their banks and insurance companies to be more alert to spotting new methods of deception that attempt to bypass restrictions; and the IMF to target global corruption. He […]
Following its vote to approve MLD5, the EP has now published the provisional version of the approved text.
The European Parliament adopted in plenary session on 19 April the proposals for MLD5. In an EP press release prior to the vote: the proposals to require public access to beneficial ownership information, to introduce registers for beneficial ownership of trusts and for banks accounts and safe deposit boxes were highlighted as important measures; EP […]
We are pleased to be hosting and speaking at a breakfast briefing for MLROs.com, giving an update on financial crime prevention laws and regulations and related developments. Attendance is free, but please register through MLROs.com, where you will find further details of the event.
FCA has published an insight article looking at the ongoing problems for victims of APP scams. The article looks at initiatives to minimise the risks of falling victim to these scams and, in particular, how the advent of Faster Payments brings both advantages and bigger risks to consumers. The article considers the potential safety feature […]
We have written an article on FCA’s proposals for updating the Financial Crime Guide.
The Joint Committee of the European Supervisory Authorities has published its report for the second half of 2017. This report highlights the following potential sources of instability: repricing of risk premia uncertainties regarding the terms of Britain’s exit from the EU; cyber attacks; and climate change. The report urges firms and supervisory authorities to seek […]
The FCA and the PRA have both published their business plans for 2018/2019. The FCA’s business plan shines a spotlight on consumer protection, including in relation to pension products and high-cost credit, as an area of concern for the forthcoming year, as well as ongoing programmes such as Brexit, and firms’ culture and governance (including […]
A paper published by the Whitechapel Think Tank, supported by UK Finance, looks at how technology can help the safe validation of identity and verification. It examines how distributed ledger technology can provide a decentralised and secure approach to validating identity and how this could benefit financial services providers and consumers.
The Treasury Committee has announced a new inquiry into economic crime. One part of the inquiry will look at the AML and sanctions regimes in the UK and how firms, individuals and the wider economy are impacted by them and the UK legislative and regulatory framework around them. The other will look at the economic […]
The FCA has published a Guidance Consultation on amending the FCA’s guidance on financial crime (GC18/1). The proposed changes include the addition of a chapter on insider dealing and market manipulation, and making miscellaneous changes as a result of recent regulatory changes to ensure the guide remains up to date. The deadline for comments on the proposals is […]
In a recent report the Complaints Commissioner expressed concern about the absence of published information about how and in what circumstances information about live ombudsman cases may be shared between the FOS and the FCA. The complaint alleged that the FCA illegally influenced the FOS in its handling of complaints against a firm represented by […]
FCA has published a draft of its approach to enforcement and supervision. The documents follow its publication of its Mission, in which it committed to publishing a series of documents setting out how it carries out its main activities. The approach to supervision explains FCA’s commitment to being forward-looking and pre-emptive, focusing on firms’ cultures […]
FATF has reported on its work and priorities to the G20 Finance Ministers and Central Bank Governors meeting. The report covers its recent and future work on key initiatives, including improving transparency in beneficial ownership information, bank derisking, and the risks and opportunities of fintech, regtech and virtual currencies.
Camilla de Silver of the SFO has spoken on prosecutors’ priorities. She started by noting the role of her audience in getting in place policies and procedures that would be adequate to provide a defence to an allegation of breach of s7 Bribery Act. She commented that, to date, SFO has not come across a […]
In its latest meeting, the Financial Policy Committee focused on: the outlook for UK financial stability generally: it thought these were standard, excepting the Brexit risks, with risks from global vulnerability still being material. Risks from certain markets in the US and in China are elevated, but there seems to be some sign of increasing […]
Treasury has published a call for evidence on the role of cash and digital payments in the new economy. It asks for views by 5 June to help it explore how it can support digital payments, support transition from cash economies while maintaining support for cash payments for that that need it, and of course […]
The JMLSG has published proposed revisions to the text of sector 12 (Asset Finance) and sector 17 (Syndicated Lending). The proposed revisions update the descriptions of how the sectors work, how to assess the risks in the sectors and how to identify who customers are. As the proposed changes are considered relatively minor, the period […]
The Wolfsberg Group has published the updated version of its Correspondent Banking Due Diligence Questionnaire and related guidance material. It also notes that it has become aware that institutions have been using the CBDDQ for other purposes and has now produced a shorter, more basic, “Financial Crime Questionnaire” which it hopes industry will find helpful.
Treasury has approved the revised JMLSG Guidance that the JMLSG submitted in December 2017.
Treasury has published its AML and CTF supervision report for 2015-2017. It notes the two most critical legislative developments during the period as the CFA and MLRs 2017, and notes the strengthened supervision that OPBAS will bring. The report shows many successes, such as non-compliance levels in no more than 5% of entities reviewed, with […]
FCA has fined Guillaume Adolph, a former short-term interest rate derivatives trader with Deutsche Bank, £180,000 and banned him. It had originally issued its warning notice in early 2014 but proceedings were stayed because of SFO investigations. FCA found Mr Adolph had improperly influenced several of the bank’s LIBOR submissions over a period of nearly […]
Treasury has published an updated AML advisory notice reminding firms of their obligation to apply EDD for higher risk jurisdictions. It has produced a table of relevant jurisdictions, showing which ones it recommends firms consider as: high risk and apply countermeasures and EDD measures in accordance with the risks (North Korea) high risk and apply EDD […]
FCA’s latest Handbook Notice confirms changes to: FEES to ensure the life and pensions intermediation class can still benefit from support from the retail pool SUP to align the Financial Crime Annual Return to the MLRs and PEP guidance. The changes seek to make the terminology in the various measures consistent and guard against firms […]
The Sanctions and AML Bill has heard its second reading in the Commons and now passes to the Public Bill Committee stage on a date not yet announced.
The Serious Fraud Office (SFO) has charged Barclays Bank Plc (Barclays) with unlawful financial assistance contrary to s151(1) and (3) of the Companies Act 1985. This relates to the financial assistance Barclays gave to Qatar Holdings LLC between 1 October and 30 November 2008, in the form of a US$3 billion loan, for the purpose of acquiring […]
An illegal money lender has been sentenced to imprisonment of 3.5 years for offences under FSMA and the CCA. In addition to bringing the successful prosecution against Dharam Gopee, FCA also successfully obtained a Serious Crime Prevention Order against him. Mr Gopee was refused a consumer credit licence by the OFT and did not get […]
MEPs have approved the proposal to add Tunisia, Sri Lanka and Trinidad and Tobago to the list of high-risk third country jurisdictions under MLD4. The vote passed the additions, despite continuing dissatisfaction among many MEPs over the inclusion of Tunisia.
We are hosting and presenting the morning session of the Financial Crime Compliance Certification course on 14 March. Suitable for senior managers needing a broad understanding of financial crime prevention laws and regulatory expectations, those new to the area and anyone else needing a refresher. Places limited, please book through the Compliance Register.
FCA has published a “Dear CEO” letter emphasising the work required to combat authorised push payment (APP) fraud. This follows the Which? super-complaint in September 2017, and the Payment Systems Regulator’s response in November. FCA explains combating APP fraud and financial crime in general is a priority articulated in its 2017/2018 Business Plan. FCA hopes […]
The Economics and Home Affairs Committees in the EP have voted through additions to the Commission’s MLD4 blacklist of high risk jurisdictions by the narrowest of margins. The proposal was to include Tunisia, Sri Lanka and Trinidad and Tobago in the list. The debate was over the inclusion of Tunisia. Many MEPs expressed incomprehension that […]
FCA fines online broker £1,049,412 for poor market abuse controls and failure to report suspicious client transactions
The FCA has fined online broker, Interactive Brokers (UK) Limited (IBUK), £1,049,412 for failings in its post-trade systems and controls for identifying and reporting potential market abuse between 6 February 2014 and 28 February 2015. The FCA said that IBUK breached Principle 3 (management and control) of its Principles for Businesses, by failing to take […]
The provisions of the Criminal Finances Act introducing unexplained wealth orders as a new investigatory tool take effect from 31 January.
The Sanctions and AML Bill is due to finish its Lords stages this week with a “tidy up” reading in the Lords on 24 January. It will then pass to the Commons.
The Commission’s Delegated Regulation adding Ethiopia to its list of high risk countries under MLD4 has been published in the OJEU.
The joint committee of the ESAs has published an opinion on the use of innovative solutions towards CDD. The opinion forms part of wider work on the “responsible and effective” use of innovation to enhance AML/CFT controls. The opinion looks at the balance between making controls more efficient against potentially weakening AML/CFT safeguards. The ESAs’ […]
We have written an article on the current status of MLD5.
The new regulator for anti-money laundering, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), was launched on 18 January 2018 thereby strengthening the UK’s anti-money laundering (AML) supervisory regime. OPBAS is housed within the FCA and will facilitate collaboration and information sharing between the professional body AML supervisors, statutory supervisors, and law enforcement agencies. In addition, the […]
The EP’s Legislative Observatory has been updated to indicate: a date of 16 April for a hearing on MLD5; and a date of 28 February for a hearing on the IDD extension.
The EU has added to its list of designated persons in relation to North Korea to align its list with UN measures. The EU has already autonomously listed several others. The Council now intends to ensure swift transposition of the changes.
Transparency International has highlighted and criticised the role London plays in international money laundering. It comments on a new investigation focusing on structures used to help sell frozen assets of the former Ukrainian President. TI notes the key role that UK based professionals helped structure the web of companies that allowed the sale to take place. […]
The Wolfsberg Group has updated on its work on the correspondent banking due diligence questionnaire, which it updated in October 2017. Following a review and feedback, it has decided only to publish the DDQ more widely when there is an additional set of materials. This will provide better and more focused guidance and set out […]
JMLSG has published further amendments to its Guidance, most recently updated in June 2017, and submitted the entire revised Guidance to Treasury for approval. Atlhough the amended Guidance will have legal status only when approved, firms can now use the amended provisions if they wish.
Following the announcement earlier this year of the new Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which will operate within the FCA to oversee the 22 accountancy and legal professional body AML supervisors in the UK, the Treasury has confirmed that the necessary OPBAS regulations have been laid in Parliament and will take effect […]
Following the publication of its discussion paper regarding the risks and opportunities, and characteristics of distributed ledger technology (DLT) in April 2017, the FCA’s feedback statement FS17/4 sets out responses received and the FCA’s next steps. The responses related to the following issues: operational risk, including outsourcing and network security; digital currency, including digital currency […]
The European Parliament and the Council has announced they have reached a political agreement on the EU Commission’s proposal to further strengthen EU rules on anti-money laundering and counter terrorist financing. This revision of the Fourth Anti-Money Laundering Directive, aims at: increasing transparency on who really owns companies and trusts by establishing beneficial ownership registers; […]
The Department for International Development and the Home Office have published the UK’s anti-corruption strategy for 2017- 2022. It is predicated on six priorities, which include strengthening the integrity of the UK as an international financial centre and reducing corruption in public procurement and grants. Initiatives will include: greater transparency over ownership and control of […]
The latest edition of Market Watch looks at: a reminder that an investment firm’s transaction report must reflect the transaction from its own perspective, reporting its immediate counterparty or client (whether or not subject to MiFIR). Whether to report at block or allocation level depends on what the immediate counterparty confirms as “executions” a reminder […]
Home Secretary announces new national economic crime centre to tackle high level fraud and money laundering
The Home Secretary Amber Rudd has announced plans to tackle economic crime to the assist in preventing fraud, money laundering and corruption. The measures include a new national economic crime centre within the National Crime Agency, which will be tasked with coordinating the national response to economic crime, backed by greater intelligence and analytical capabilities. The […]
Megan Butler has spoken on the fundamental importance of co-ordination between national regulators, particularly in dealing with financial crime and cyber-threats. She looked at the particular benefits and risks that machine learning and algorithmic trading have brought. She stressed the importance of firms reporting material breaches, and the need to let FCA know when they […]
The UK government has published the answer to a written question asked of HM Treasury that reveals that they are in the process of negotiating amendments to the 4th Anti-Money Laundering Directive to bring virtual currency exchange platforms and custodian wallet providers into the AML regulatory framework, thereby bringing them within the scope of relevant […]
The ESAs have published draft RTS under MLD4 on how credit and financial institutions should manage their AML/TF risks at group level where their group includes branches or major subsidiaries in third countries that do not permit group wide policies to be used. The RTS include practical steps institutions should take, such as: getting customer […]
On 5 December 2017, HM Treasury published an Advisory Notice on money laundering and terrorist financing controls in higher risk jurisdictions. The Advisory Note follows the Financial Action Task Force (FATF) statements identifying high risk jurisdictions; which was discussed at its plenary meeting held on 3 November 2017. In the Advisory Note, HM Treasury draws […]
Two individuals have been found guilty of various offences relating to carrying on regulated activities without authorisation, false and misleading impressions and being a company director contrary to the Theft Act, in relation to an investment scheme which mis-sold shares to often vulnerable investors. Samrat Bhandari and Muhammed Mirza’s convictions follow the guilty pleas of […]
FCA’s latest quarterly consultation proposes minor changes to: DEPP due to a change in FCA’s governance structure LR, in the meaning of Premium Listing Principle 6 and, to DTR, on where diversity reporting may be located under corporate governance reporting requirements DISP relating to access to FOS for PEPs, and referrals to TPO the Glossary definition […]
The European Commission has finally adopted the RTS under PSD2 on strong customer authentication (SCA) and common and secure open standards of communication. The key purpose of the RTS is to create stringent security procedures to reduce payment fraud levels and protect confidential data. The key requirement is for at least two independent elements in […]
We’ve written a briefing on recent regulatory warnings about ICOs, and how they may fall within the UK’s regulatory perimeter.
FCA has published a note summarising the results of its review of the compliance function in wholesale banks. It had asked 22 wholesale banks (including global banks, medium-sized banks focusing on specific areas or geographies and firms with less significant UK footprints) 27 questions. Key themes included: the need for the compliance function to evolve in […]
FCA has fined Paul Walter, a bond trader formerly with Bank of America Merrill Lynch International, £60,090 for market abuse. It found Mr Walter created a false and misleading impression about the supply and demand in the market for Dutch State Loans, and did so 12 times in summer 2014. Mr Walter had entered a […]
The House of Lords has tabled its list of desired amendments to the Sanctions and AML Bill in advance of its Committee hearing on 21 November. The Lords is concerned at the amount of power given to Ministers to make secondary legislation and is seeking to impose controls on the ability and rationale for using the powers.
The Government has made legislation creating a financial sanctions regime in relation to Venezuela and OFSI has published a financial sanctions notice, although there are as yet no designated persons under the regime. The changes follow an EU decision.
Reports from the European Parliament say that the last scheduled trilogue on MLD5 ended without agreement, because the Council did not have a mandate to negotiate and there was no text for discussion. ECON expressed its disappointment that the Council “is not ready to undertake serious negotiations”, and said it expected the Council to be […]
On 14 November 2017, the FCA published a speech delivered by Julia Hoggett, Director of Market Oversight at the FCA, at the ‘Recent Developments in the Market Abuse Regime’ conference. The speech focused on effective compliance with the Market Abuse Regulation. Ms Hoggett highlighted in her speech that: effective oversight and compliance cannot and should not stay still; […]
ESMA has become the latest body to denounce initial coin offerings (ICOs), issuing statements directed at investors and firms highlighting the distinct risks involved. Echoing FCA’s previous warnings , ESMA has focused on the risks of investors to losing all their invested capital, and firms conducting ICOs potentially also carrying on regulated investment activities. Investors are […]
FCA’s latest Market Watch newsletter highlights: the fast approach of the deadline for ensuring all entities that need an LEI have one; ESMA’s reference data files that are available to download; the transitional arrangements FCA has put in place as it decommissions its MiFID transaction reporting system and moves to the new Market Data Processor […]
FCA has published the form “Annex 1” institutions must complete in respect of the relevant senior individual and nominated officer within their firms. FCA says it now requires this form to be completed because of the importance of the role, which is stressed in the MLR 2017.
OFSI has published a financial sanctions notice confirming that the UN Security Council has imposed restrictive measures because of the threat to international peace and security posed by Mail, and this was followed by an EU Regulation imposing an asset freeze on individuals and entities identified by the UN. However, no-one has yet been identified […]
FATF has held its plenary meeting in Buenos Aires. Outcomes from the meeting include: an update on the list of NCCTs. FATF’s stance remains unchanged on North Korea and Iran. Countries with Strategic Deficiencies are now listed as Bosnia and Herzegovina, Ethiopia, Iraq, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, Vanuatu and Yemen. Uganda, however, […]
We have written a summary of the Sanctions and Anti-Money Laundering Bill as it starts its Parliamentary process.
We have agreed with the Compliance Register a new date for our popular Financial Crime Compliance Professionals Certificate Course. We will host this on 14 March 2018. Bookings are already open. Please contact the Compliance Register for details and to book.
The Commission has made a delegated regulation under MLD4 to add Ethiopia to the list of high risk third countries. It notes that its work to find the most appropriate way of assessing which jurisdictions should be on the list is still underway, but that in the interim it is appropriate to add Ethiopia to […]
The third commencement order made under the Criminal Finances Act 2017 brings into force from 31 October the provisions enabling certain entities within the regulated sector to share information relating to suspicions, and provide a joint SAR to the NCA under POCA or the Terrorism Act.
HM Treasury publishes national risk assessment of Money Laundering and Terrorist Financing Regulations 2017
HM Treasury has published the 2017 national risk assessment (NRA) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLRs). In 2015, the government published its first NRA of money laundering and terrorist finance, followed by an action plan in 2016 where the government set out […]
The new Sanctions and Anti-Money Laundering Bill (the Bill) was introduced in Parliament on 18 October, following the announcement of the Bill in August. This Bill seeks to enable the UK to continue to comply with the current UN sanctions regime after Brexit, by covering matters currently deal with through the European Communities Act 1972 (which will be […]
After collecting responses from over 13,000 UK consumers, FCA has revealed the results of its largest tracking survey of consumer behaviour and use of retail financial products and services. Aiming to tell the financial story for six age demographics (and key themes of each life stage), the survey found that 50% of the adult population shows one […]
The European Commission has opened a public consultation on broadening law enforcement access to centralised bank account registries, with a view to increasing the speed and effectiveness with which authorities can trace criminal assets and investigate corruption. Targeted at consumers, law enforcement agencies and almost all within the banking sector, the consultation seeks to collect opinions […]
The second commencement order for the Criminal Finances Act 2017 brings into force several new provisions, including those on the potential extension of the moratorium period following a SAR and the new procedure for allowing regulated sector entities to share information on suspicions. These parts of the Act take effect from 31 October 2017.
The Wolfsberg Group has updated: its Correspondent Banking Due Diligence Questionnaire. The Questionnaire has been around for some years, but this is its first significant and substantial overhaul; and its Payment Transparency Standards. Additional standards have been added to those originally recommended.
The Bond Dickinson financial services team is delighted to have achieved a Legal 500 ranking. The new directory described the team as providing ‘responsive, practical, commercial and cost-effective’ advice to a wide variety of clients within the retail sector of the financial services industry. It says that “‘Very knowledgeable’ team head Andrew Barber has ‘in-depth […]
The Financial Crime Compliance Professionals Certificate course, hosted by us, will now be on 14 March 2018. For details, please see the Compliance Register’s website.
In a bid to bolster the capital’s reputation for financial and legal services post-Brexit, the City of London Corporation (CLC) has announced its backing for the development of a new court complex on Fleet Street to replace all of the City’s current court services except the Old Bailey. The space will provide for 18 courtrooms and focus […]
The new corporate offence under the Criminal Finances Act trips off the tongue! It takes effect from 30 September, and “relevant bodies” must have considered their exposure to it and put in place reasonable procedures to guard against committing it. We have written an article on the offence and the expectations of HMRC.
The Joint Committee of the ESAs has published guidelines under the revised Wire Transfer Regulation which was part of the MLD4 package, and that requires payment service providers to establish specific information about the payer and payee in electronic transactions, to combat terrorist financing and money laundering. In an effort to harmonise regulatory expectations across the EU, the guidelines ‘set […]
Mark Steward has spoken on the increase in FCA investigations into market conduct over the past year. He said the 75% increase results from: more investigations into capital market disclosure issues the extension of scope of the reporting regime which MAR has brought – including a 77% increase in reports because of the MAR requirements […]
OFSI has published a quick guide to UK business’ obligations under financial sanctions requirements. The material is not new, but repackages some existing guidance on: complete general guidance – including guidance on licences and queries specific to certain industry sectors monetary policies and the assessment process and the quick guide
Lloyd’s has published a market bulletin on the Criminal Finances Act, focussing on its expectations of managing and members’ agents – in particular the need for senior management appreciation of the need for a focussed risk assessment and implementation procedure to address the risks of the failure to prevent facilitation of tax evasion offences.