Category Financial Crime
We are delighted that Jonny Williams has joined the financial services regulatory team at Womble Bond Dickinson UK. More information on Jonny and his appointment can be found here.
The NCA has reported a rise in SARs from the private sector in the past year. It reports nearly 464,000 SARs received and processed in the year covered by its report. However, Transparency International says this should not mask the failings in the system. TI is critical of the scarce resources and out of date system […]
HMRC has updated its website in respect of money laundering supervision. The updates include the addition of webinars on firms’ obligations and how HMRC applies its supervisory duties.
JMLSG has updated its guidance to take account of changes to the MLR 2017 that came into force on 10 January. The changes ban firms from setting up anonymous accounts and passbooks or providing anonymous safe-deposit boxes, and direct that CDD take place on all anonymous accounts, passbooks and safe-deposit boxes in existence on that date, […]
The first meeting of the Government’s task force on economic crime has been chaired by the Home Secretary and the Chancellor. The Government plans that the Economic Crime Strategy Board will meet twice a year and will include senior representatives from Barclays, Lloyds and Santander as well as from UK Finance, the NCA, SRA, Accountants […]
FCA has published its “Sector Views” setting out its observations from monitoring its 7 selected sectors of: retail banking retail lending general insurance and protection pensions and retirement income retail investments investment management and wholesale financial markets It produces this review to inform its overall approach and ultimately its business plan. The studies identify where […]
ESMA and EBA have published papers on ICOs and crypto-assets. The ESMA paper clarifies which crypto-assets currently qualify as financial instruments and provides its views on gaps and risks. The paper identifies several of these: where assets do not fall within the scope of MiFID financial instruments, there are substantial investor risks. ESMA says that […]
The Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) Protection of Trading Interests)(Amendment) Order 2018 will take effect on 1 February 2019. It updates a 1996 order to reflect updates to the EU Blocking Regulation – which makes it an offence for EU companies and individuals to comply with US sanctions imposed on Cuba, Iran […]
Following complaints by banks that AML rules are not effectively and consistently supervised, the Council has agreed to give EBA greater powers over supervision, including allowing it to perform risk assessments on competent authorities and addressing decisions directly to individual banks as a last resort. The proposals must now be agreed with the EP.
The latest edition of Market Watch outlines FCA’s views on industry implementation of MAR. FCA stresses the importance of industry participants properly calibrating their risk assessments to the markets and asset classes they operate in and showing it is responsive to changes. It notes the importance of strong judgment in market abuse compliance and emphasises […]
The FOS has published a consultation on its plans and budget for 2019/2020. It notes that from April 2019, its jurisdiction will be expanded by the addition of two significant areas of work: complaints made by SME customers of financial services, and complaints made by customers of claims management services. The consultation questions include inviting […]
The Home Office has updated on the first year’s progress against the UK’s anti–corruption strategy. The update concludes that the commitments made have largely been met, and that the UK is on track to deliver its remaining commitments. including those due in 2019, notwithstanding Brexit. The report highlights a number of points of interest to […]
We have written an article for Financial Regulation International on financial crime prevention developments in 2018.
FCA has now finalised its guidance on insider dealing and market manipulation within the Financial Crime Guide. It received 8 responses to its consultation, generally positive. However, some respondents raised concerns about: mandating a duty to prevent these crimes; the risk of firms tipping off by taking some of the actions the guidance proposed; where […]
The EBA has published its Opinion on how eIDAS certificates and be used under the SCA and CSC RTS under PSD2. The Opinion: clarifies that it is the ASPSPs that should choose whether a Qualified certificate for electronic seals (QSealC) or a qualified certificate for web authentication (QWAC) should be used for identification purposes; suggests […]
BEIS has published its response to its consultation on the reform of Limited Partnership law. It has confirmed new measures, applicable to all limited partnerships in the UK (and, for Scottish Limited Partnerships, in addition to the beneficial ownership reportingrequirements previously introduced), to: require anyone registering a Limited Partnership to show they are registered with an […]
FCA has published the results of its study of cyber-resilience and security in 20 asset management and wholesale banking firms. Its review comprised firms of varying size, scale, operating models and geography. The review comes with many caveats, but the key messages include: Boards and Management Committees still have limited familiarity with the specific cyber-risks […]
The Upper Tribunal has ruled on an application by Mohammad Prodhan, former CEO of Sonali Bank (UK). Mr Prodhan contended that FCA was time-barred from taking action against him. He also applied for a direction for his anonymity in proceedings of the Tribunal and the FCA. Mr Prodhan alleged that FCA had not issued him with a Warning […]
Companies House has announced it now carries on additional checks on certain applicants for registration, to guard against designated persons using economic resources such as companies in an attempt to get round sanctions restrictions. From 12 December, Companies House will check applications from UK companies, European Companies, LLPs and SLPs, to assess the name, address, […]
The Charity Commission has warned charities that operate in Syria or Turkey of the dangers of aid passing through the Bab Al-Hawa crossing. There have been reports that the crossing is under the control of Al Qa’ida which means that charities and their partners that use it could inadvertently be funding that organisation and thereby […]
FATF has published the long-awaited mutual evaluation report on the UK’s measures to combat money laundering and terrorist financing. The report notes that, because of the exceptionally large funds flow through the UK financial sector and the risks that some of these have links to crime and terrorism, there is a strong understanding of the […]
FCA has published a decision notice setting out its proposal to find Mohammad Prodhan, the former CEO of Sonali Bank (UK) Ltd £76,400 in relation to the bank’s AML systems and controls. Mr Prodhan was responsible for the establishment and maintenance of effective AML systems and controls and FCA considered that between 2012 and 2014 […]
ECB has published its expectations on financial market infrastructures in terms of cyber resilience oversight. Its expectations are based on CPMI/IOSCO guidance and is aimed at providing the FMIs with clear steps on how to operationalise and enhance the guidance as well as providing supervisors with a clear remit for engaging with FMIs and assessing […]
Treasury has made the Sanctions Review Procedure (EU Exit) Regulations 2018. The Regulations, made under SAMLA, come into force on 7 January 2019 and address the mechanics of requesting reviews, variations or revocations of designations made under the Act.
SFO announced that the first DPA, agreed with what is now ICBC Standard Bank plc for breach of s7 Bribery Act, has come to an end after the bank successfully complied with its terms. The DPA lasted for 3 years. Its terms included payment of compensation and disgorgement of profits as well as a fine, and […]
FCA has published the results of its survey on tech and cyber resilience, which showed that nearly half of all firms don’t upgrade or retire old IT systems in time, and only just over half say they can measure the effectiveness of their information asset controls. Megan Butler, speaking about the report, said that FCA […]
The first Commencement Order under the Sanctions and Anti-Money Laundering Act 2018 has been made. It brings into force the majority of the sanctions provisions in the Act that enable Ministers to make and implement sanctions. The rest of the Act, including the repeal of existing legislation, will be the subject of a separate Order, […]
Matthew Wagstaff has spoken on SFO’s priorities and resourcing, and the successes of its collaborations with other enforcement agencies, particularly the DOJ. He spoke of SFO’s perception that the s7 Bribery Act offence has been a big success, as has been the ability generally to hold senior management to account. He moved on to discuss […]
Rob Gruppetta has spoken on FCA’s views on the use of innovation, data and algorithms to help it in its supervision of, and approach to, financial crime prevention. He said that FCA is always open to innovation, but that it should not be approached without scrutiny. He highlighted FCA’s TechSprints (or “hackathons”), one of which […]
The FCA has published a speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered at the Regulation of Cryptocurrencies event on 20 November 2018. The speech highlights the key issues identified by the Cryptoassets Taskforce (consisting of the FCA, HM Treasury and the Bank of England) in its report published at the […]
Sir Brian Leveson and Lisa Osofsky (among others) were listed to give evidence to the Bribery Act Committee. They were expected to be asked questions such as: whether a company that self-reports at an early stage should be offered a DPA as a matter of course; the truth in a belief that some of the […]
ESMA has updated its FAQs on the Market Abuse Regulation, adding new questions on trading restrictions for persons discharging managerial responsibilities.
The Financial Stability Board has published a “cyber lexicon“, comprising a set of around 50 core terms related to cyber security and cyber resilience in the financial sector.
FCA has completed its first financial crime survey. It intends to carry out the survey annually, using the Financial Crime Return. Over 2,000 firms were required to file the return, and FCA looked to establish: the number of customers that pose a higher risk of financial crime: Firms identified 120,000 PEPs and 11,000 non-EEA correspondent […]
The Foreign Affairs Committee in the Commons has launched an inquiry on the future of UK sanctions policy. Given SAMLA’s Royal Assent, the Committee is to look at different options for the UK’s sanctions policy post-Brexit. It is calling for written submissions on several elements of sanctions regimes, including views on the advantages and disadvantages […]
Hannah von Dedelszen has spoken on how companies that choose to self-report can engage with SFO. She stressed that being open, honest and transparent is the key. she noted some firms operate “smoke and mirrors”, involving admitting some things but hiding more major issues. She said any firm reporting must do so properly. Going forward, […]
BoE, Treasury and FCA have hosted what has now become a regular one day exercise to test the financial sector’s resilience to a major cyber incident impacting the UK.
The Law Society has responded to the Law Commission’s consultation on reform of the SARs regime. It says the proposals, in the main, do no more than “tinker around the edges” of the issues. It says some of the more radical proposals, such as adopting a serious crimes approach instead of an all crimes approach, […]
FCA’s latest Policy Development Update lists a number of publications due before the end of the year: policy statement on regulating CMCs policy statement on RTS and guidelines under PSD2 rates proposals for covering the costs of OPBAS review of permitted links for insurers in relation to Patient Capital and a discussion paper on Patient […]
HMRC has updated its guidance on how it takes civil measures for breaches of AML requirements. The guidance not only sets out HMRC’s approach, which is to promote compliance and prevent non-compliance, but then to respond to any non-compliance in a way that will encourage sustained future compliance but also explains how it will use […]
UK Finance has submitted a note to the Economic Crime enquiry on how to improve the effectiveness of the sanctions regime. It says its members regard SAMLA as a necessary piece of legislation which is largely as expected. It recognises that operating outside the EU framework might lead to greater flexibility, and makes some suggestions […]
The Cryptoassets task force, led by Treasury, has published its report on the UK’s policy and regulatory approach to cryptoassets. The report looks at the policy and regulatory implications of DLT and cryptoassets and comments on the considerable risks as well as the potential benefits. Now the Task force will consult on a number of initiatives, specifically: […]
FATF has published Guidance to a risk-based approach (RBA) to AML and CFT in the life insurance and securities sectors. The Guidance: outlines the key elements involved in applying a RBA to AML/ CFT associated with life insurance sets out the types of securities providers that may be involved in a securities transaction and their […]
Treasury has updated its periodic AML advisory notice to reflect the conclusions from the FATF plenary meeting. The notice reiterates the expectation that firms will: apply EDD and countermeasures in respect of North Korea apply EDD in respect of Iran and take appropriate measures to minimise risks in respect of the Bahamas, Botswana, Ethiopia, Ghana, […]
The Institute of International Finance has published a short form summary report following a survey it conducted of 59 regulated firms. In particular, the study found that the use of machine learning techniques is spreading across the industry, and is being used to gain greater and faster insights to be reviewed by dedicated AML analysts, […]
FCA has today published Evaluation Paper 18/2 on the impact of bringing additional benchmarks into the regulatory and supervisory regime. The paper is the second of a new series of FCA evaluations on its past interventions. Background Misconduct and benchmark manipulation cases and FSA investigations led the Government to ask Martin Wheatley to establish an […]
At FATF’s latest plenary meeting, in Paris, the US presidency discussed: streamlining FATF; strategic initiatives, such as further statements on monitoring of terrorist funds, amendments to FATF Recommendations to address regulation of virtual assets and future work on proliferation financing; peer reviews and review of jurisdictions with strategic deficiencies. The UK report is expected to […]
The High Court has delivered a judgment in David Lonsdale v National Westminster Bank PLC. The bank had made several SARs in relation to Mr Lonsdale and companies he was involved with and, as a result, had frozen all relevant accounts. After Mr Lonsdale applied to the court, the bank lifted the freeze. The next […]
Treasury has enabled a regime to implement the EU Regulation on financial sanctions against persons, entities and bodies involved in proliferation and use of chemical weapons. There are not any designated persons on the list as yet.
The EU has adopted a Directive on criminal sanctions for money laundering. The Directive: sets minimum requirements for Member States’ laws on defining criminal offences and sanctions in relation to money laundering; imposes a maximum 4 years’ imprisonment with the possibility for additional civil and administrative sanctions; introduces the possibility of holding legal entities liable […]
FATF has published its updated consolidated assessment ratings, based on reviews of its members AML/CFT measures after the 4th round of reviews. All countries are graded on methodology and technical compliance. The UK does not yet feature in the table as the 4th round report for it has not yet been published.
OFSI has published its annual review covering the period from April 2017-March 2018. The review covers: that 29 regimes were implemented during the year, with the most active list by far being North Korea (with 96 additions, and other regimes accounting for less than 30, but the lists with the largest number of sanctioned targets […]
The respondent to the first Unexplained Wealth Order granted under the Criminal Finances Act 2017 failed in an appeal against it. NCA had obtained the order in February, and it was appealed in July. The respondent is the wife of a banker from a non-EEA country. £22m of UK property has been frozen, and the respondent […]
FCA has published its Thematic Review into money laundering and terrorist financing risks in the E-money sector. Its review covered 13 firms and focused on e-money products including prepaid cards and digital wallets, but not money remittance services or any services that fall outside FCA’s regulatory remit (such as exempt cards). FCA found the firms […]
FCA has fined Tesco Personal Finance plc £16,400,000. It found the bank failed to exercise due skill, care and diligence in protecting its PCA holders against a cyber attack that took place in November 2016. As a result, it breached Principle 2 by failing to act with due skill, care and diligence. When the cyber […]
The APP Scams Steering Group, set up by the PSR, is consulting on a draft industry code to reimburse victims of APP scams. The code sets standards for industry to meet to help get appropriate treatment for customers. The code proposes, among other things, that where a consumer has met their requisite level of care […]
FCA’s latest Market Watch focuses on market conduct and transaction reporting issues. It follows up on previous editions, which looked at FCA’s conclusions from a series of supervisory visits on suspicious transaction reporting. FCA had been concerned about over-reliance on “out of the box” alert calibration and that surveillance was not very developed for some asset […]
The Treasury Committee has published a report, in which it describes its unanimous support for regulation for the “Wild West” crypto-currency market. The report outlines all the problems and dangers the market presents and calls for proportionate regulation, which could improve customer outcomes, reduce some of the risks and see the UK become well placed […]
FCA has confirmed its ban on Christian Bittar, formerly interest rate derivative trader at Deutsche Bank. It found Mr Bittar requested EURIBOR submitters to make high or low submissions, both internally and externally, so that he could benefit his own and sometimes other traders’ profitability. Mr Bittar was convicted and imprisoned for his actions, otherwise […]
Michael Nascimento, the controlling mind of a £2.8m investment fraud was sentenced to 11 years’ imprisonment in the Southwark Crown Court. Between July 2010 and April 2014, members of the public were cold-called and subjected to high pressure sales tactics to persuade them to purchase shares in a company that owned land on the island of Madeira. […]
The FCA has held its annual public meeting, at which it reviews the year past, talks about key priorities for the year ahead and takes questions from the public. Charles Randell, who was chairing his first Annual Public Meeting, opened the meeting by: noting that the demands of Brexit preparation meant that they were forced […]
Lisa Osofsky has given her first speech since taking over as SFO Director. She spoke of her past, as a federal prosecutor and then working in financial institutions. Her speech focused on how SFO has now successfully used DPAs and how she plans to use many more. She noted that SFO will look at whether the company has […]
OFSI has reminded all firms that hold or control funds or economic resources belonging to, owned, held or controlled by a designated person to provide a report to OFSI by 12 October. The report should cover both the UK and overseas where they are subject to UK financial sanctions legislation and should report the value […]
The FCA has published final notices in respect of One Call Insurance Services Limited and its majority shareholder John Radford for breaches in relation to client money and assets in the general insurance and protection sector. The final notices follows the decision notices that we reported on in January 2018. As planned, the FCA has fined […]
HMRC has published its guidance on civil measures it can take to address non-compliance with AML requirements. The guidance looks at HMRC’s role under the 2017 MLRs and how it will use its powers under those Regulations and under the CTA. The note addresses civil measures, but HMRC stresses that it may treat any breach […]
Lisa Osofsky has started her 5 year term as SFO Director.
FCA has confirmed its ban on Arif Hussein following a decision of the Upper Tribunal published in June. Mr Hussein was a derivatives trader with UBS, who engaged in internal chats with a UBS trader-submitter knowing that it would be improper to participate in conduct intended to influence UBS’ LIBOR submissions. FCA found that Mr […]
The FCA and the Pensions Regulator have launched a joint advertising campaign to raise awareness of pension scams, following research they have conducted which shows that pension scam victims each lost an average of £91,000 in 2017. The campaign, ScamSmart, is aimed at individuals aged 45-65 who are the group most at risk of pension […]
The European Commission has adopted a Delegated Regulation adding Pakistan to the list of high-risk third countries under MLD4. Member States will be bound to require application of EDD when dealing with any persons from Pakistan. The requirement will take effect 20 days after it is published in the Official Journal.
In December 2017 the Law Commission confirmed that one of the projects it would be working on was addressing the absence of explicit case law and legislation that has given rise to uncertainty as to the validity of electronic signatures in some cases. Consequently, the Law Commission has now published early conclusions from its review […]
The industry body UK Finance has developed a voluntary ‘How to’ guide on compliance with the requirements of the Funds Transfer Regulation (also referred to as the Wire Transfer Regulation). The guide aims to assist with an industry-wide harmonised approach to compliance, thereby increasing the efficiency of payment processing. The guidance’s stated aim is to […]
Commission Delegated Regulation (EU) 2018/1108 has been published in the OJ. This Regulation sets out RTS relating to the criteria for determining when it may be appropriate to require electronic money issuers and payment service providers who have certain cross-border operations to appoint a central contact point for a particular territory. The RTS also address the […]
We have written an article setting out the detail of the Sanctions and AML Act.
FATF has published its report on the techniques and tools used by professional money launderers – those who launder money for others, for a fee. FATF has identified that many countries do not properly investigate and prosecute complex and third party laundering. The report looks at the characteristics of the professional money launderers and at […]
On a new page on its website, ‘Measuring our impact before we intervene‘, the FCA has published a group of documents that aim to provide an indication of how the FCA assesses the likely impact of its policies. These documents consist of: a paper setting out the FCA’s approach to conducting cost benefit analyses for […]
BEIS has heralded the Registration of Overseas Entities Bill which will require all foreign companies that own UK properties to disclose their beneficial owners on a public register. Key provisions of the Bill include that: any foreign entity that sells or leases property must first publicly declare its beneficial owner(s). If it does not, this is a […]
FCA has published its Annual Report and Accounts for 2017/18. The report includes details of: FCA’s work preparing for Brexit; key regulatory changes such as MiFID 2 and PSD 2; work on SMCR extension; thematic work on high cost credit and consumer debt; and the PPI customer information campaign. It also articulates what FCA has done […]
FATF has: reported to the G20 on its current work: highlights of the report include its work on crypto-currencies and assets, improving transparency of beneficial ownership, de-risking, and fintech/regtech and digital identity; published its objectives during its US presidency: it will prioritise work on virtual currencies, as well as the now standard work on CFT […]
The Financial Stability Board has reported to the G20 Finance Ministers and Central Bank Governors on its work in relation to crypto-asset markets. It has worked with the CPMI to set up a framework for monitoring the financial stability implications of market developments, and has been working out the metrics for monitoring that it will […]
Treasury has updated its AML advisory notice on high risk jurisdictions. The advisory meets the requirements of the 2017 MLRs to ensure the regulated sector applies EDD to high-risk countries with reference, among other things to the Commission’s Delegated Regulation setting out the high risk jurisdictions. Treasury has updated its guidance following the FATF June […]
The European Commission (the Commission) announced that MLD5 entered into force on 9 July 2018. The new rules introduce stricter transparency requirements, including full public access to the beneficial ownership register for companies. Some of the key improvements include limiting the use of anonymous payments through pre-paid cards and widening customer verification requirements. Věra Jourová, […]
European Parliament looks into use of cryptocurrencies and blockchain by criminals for illegal activities
A paper prepared by Policy Department A at the request of the European Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance delves into the increasing use of cryptocurrencies by criminals for illegal activities such as money laundering, tax evasion and terrorist financing. Regulators are said to be very concerned about the use […]
FCA’s latest Policy Development Update shows plans for consultations on fees for claims management companies and for recovering the costs of OPBAS due over the next couple of months, and policy proposals for regulatory fees and levies for 2018/19 due in October. It notes these will address onshoring ESMA regulatory functions after Brexit.
A new court dedicated to cybercrime, fraud and economic crime is to be built on the site of Fleetbank House, and is expected to be completed in 2025.
FATF and the Middle East and North African FATF have held their third plenary meeting. The meeting updated on a wide range of issues, including discussion on several typology reports and discussion of mutual evaluation and follow up reports on a number of jurisdictions. The plenary also discussed the progress Iraq and Venezuela have made […]
We recently wrote an article for Compliance Monitor setting out themes from recent FCA thematic reviews.
The European Commission is unhappy with Member State transposition of MLD4. It currently has open infringement procedures against 20 Member States but says most have adopted and notified missing transposition measures. The Commission is now scrutinising those measures, while noting Member States have only until January 2020 to implement MLD5. The Commission is also looking […]
Sam Woods has written a “Dear CEO” letter to CEOs of all dual-authorised firms on exposures to crypto-assets. PRA understands firms may already have limited exposure to such assets, and is writing to clarify its expectations of how firms behave, particularly in view of Fundamental Rules 3, 5 and 7. The letter sets out what […]
FCA is consulting on changes to complaints handling rules to help victims of authorised push payment fraud. Currently, victims cannot complain to the PSP that receives their payment when their own PSP is not at fault. FCA now proposes rule changes to require firms to handle this type of complaint, and also to allow eligible […]
The Commission has confirmed it will assess, at the end of June, Serbia’s progress and commitments towards meeting its AML obligations and the FATF recommendations. It may then decide to add the country to the list of high-risk jurisdictions under MLD4.
The Payment Systems Regulator has published a summary of measures it is currently working on with other bodies to protect customers from authorised push payment scams – where fraudsters trick people into sending them money. These ongoing or imminent measures include the enhancement of sanctions data quality confirmation of payee guidelines for identity, verification, authentication […]
The House of Lords’ Select Committee on the Bribery Act 2010, which was recently set up to conduct a post-legislative scrutiny of the Act, has issued a call for evidence. The Committee’s mandate includes to review the Act’s operation and its enforcement, and to make recommendations to the Government. While the Committee invites submissions on […]
MLD5 has now been published in the OJEU. It is dated 30 May and was published on 19 June. Member States are required to implement it by 10 January 2020.
FCA has written a “Dear CEO” letter on the financial crime risks of crypto-assets. The letter notes the scope for cryptoassets to be used for both criminal purposes and non-criminal purposes that nonetheless present the risk for abuse. The letter sets out what FCA regards as good practice for how banks handle these risks. The letter suggests: that […]
The Council of the EU has agreed measures on criminal sanctions for money laundering offences. A new Directive will set minimum rules for defining money laundering offences and the criminal sanctions for them. The maximum imprisonment will be only 4 years, with additional civil sanctions possible. The directive also caters for exclusion of legal entities […]