Category Financial Crime
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 […]
Nicky Morgan and Andrew Bailey have exchanged letters of the problems customers faced following TSB’s IT migration. The Treasury Committee had asked about the work FCA had done in advance of the planned migration, its assessment of the problems and its views on TSB’s evidence to the Committee and its communications with customers as well […]
FCA has fined Canara Bank £896,100 for failings in its AML systems, and has restricted it from accepting deposits from new customers for 147 days. FCA found that, for a period of over 3 years, the banks failed to maintain adequate systems and did not take sufficient steps to remedy weaknesses that it had been […]
Lisa Osofsky, former US federal prosecutor, more recently a Managing Director and Head of Investigations for EMEA at Exiger, will become the next Director of SFO. She will take up the post on 3 September.
Parliament has set up a new Committee to consider the Bribery Act. It plans to publish a call for evidence in due course.
OFSI has updated its guidance on reporting to it. There is a legal obligation to report to OFSI: known or suspected breaches of financial sanctions; knowing or suspecting that a person is a designated person; or knowing or suspecting that an entity holds frozen assets where that knowledge or suspicion arises in the course of business. OFSI’s […]
Megan Butler has spoken at the AML TechSprint event. She focused on how data and technology can help to detect and disrupt criminal activity and how financial institutions staff can help in the fight against financial crime. She spoke of the insights into criminal behaviour FCA has gained since it introduced the financial crime return. It […]
The ping pong stage of negotiations of the Sanctions and AML Bill took place as scheduled on 21 May, and the two houses of Parliament agreed the text which received Royal Assent on 23 May.
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 […]