Category Financial Crime
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 […]
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.