FCA fines The TJM Partnership Limited (in liquidation) £2 million for serious financial crime control failings in relation to cum-ex trading

The FCA has fined The TJM Partnership Limited (in liquidation) £2,038,700 for failing to ensure it had effective systems and controls to identify and reduce the risk of financial crime and money laundering in its business. This is the third case brought by the FCA in relation to cum-ex trading and the largest fine so far. This reflects the multiple examples of serious misconduct over a lengthy period.

TJM did not have adequate procedures, systems and controls to identify and mitigate the risk of being used to facilitate fraudulent trading and money laundering in relation to trading on behalf of clients of the Solo Group between January 2014 and November 2015. It also failed to adequately apply its anti-money laundering policies and did not properly assess, monitor and mitigate the risk of financial crime.

Trading executed by TJM on behalf of the Solo Group’s clients throughout the period was characterised by a circular pattern of purported trades – characteristics which are highly suggestive of financial crime. The trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium.

TJM executed trading to the value of approximately £59 billion in Danish equities and £20 billion in Belgian equities and received commission of £1.4 million, which was a significant proportion of the firm’s revenue in the period.

The firm also failed to identify or escalate any potential financial crime concerns and money laundering risks in two other instances related to Solo Group business. This involved transactions with no apparent economic purpose except to transfer substantial windfall profits of €4.3 million amongst its clients. TJM also accepted payment from a third party without appropriate due diligence.

As TJM agreed to resolve all issues of fact and liability, it qualified for a 30% discount under the FCA’s Settlement Discount Scheme.

The investigation process involved proactive engagement with law enforcement agencies and regulatory partners around the world.

Mark Steward, Executive Director of Enforcement and Market Oversight, said:

‘TJM allowed itself to become involved in a self-evidently suspicious scheme of circular transactions that looked like shams. TJM demonstrated a complete lack of care and diligence in participating in these transactions of dubious purpose.’

Article Credit: https://www.fca.org.uk/news/press-releases/fca-fines-tjm-partnership-limited-liquidation-serious-financial-crime-control-failings