Category: FCA

UK Financial Conduct Authority Acts to Improve Financial Crime Issues at Challenger Banks

FCA, Financial Crime Controls
The U.K. Financial Conduct Authority has published the findings of its multi-firm review into financial crime controls at challenger banks. The FCA undertook the review in 2021 in response to the 2020 National Risk Assessment of money laundering and terrorist financing, which highlighted the risk that quick onboarding processes advertised by challenger banks could appeal to criminals. The FCA’s review revealed that technology is being used well to identify and verify customers quickly and that there are not many differences between the financial crime risks facing challenger banks and those posed to traditional retail banks. However, there are several areas…

Strikes at UK Financial Regulator Due to Start This Week

FCA
Unionized staff at the Financial Conduct Authority will mount the first strike in the chief UK financial regulator’s nine-year history this week over a dispute over pay and working conditions. Staff will go on strike on Wednesday and Thursday following a protracted battle with management over restructuring plans that Unite claims would amount to pay cuts for many employees. The industrial action is the first of a series, with further strikes earmarked for June and July, although fewer than 300 of the watchdog’s 4,000 workers are expected to take part this week. Unite disclosed last month that it had 640…

Highlights of the FCA’s New Approach in 2021

FCA
The Financial Conduct Authority’s (FCA) mission is to protect consumers from harm, enhance the integrity of the UK’s financial system and promote competition. The regulator is continuing to pursue these objectives while also working to become a more innovative, adaptive and assertive regulator. This approach will enable the FCA to meet the challenges of the increasingly data-driven financial services sector in the UK, the shift to a net-zero economy, the continuing effects of the pandemic, and help build a new regulatory regime after Brexit. Protecting consumersIn January, the Supreme Court delivered its judgment in a case brought by the FCA…

FCA Fined U.K. Financial Organisations £568m in 2021

FCA, Regulatory Fines
The Financial Conduct Authority (FCA) has fined financial organisations in the UK for a total of £568m in 2021. This total is made up by fines against major banks and action against individuals for insider dealing, non-financial misconduct and carrying-out activities without authorisation. Experts believe the emergence of new forms of financial crime during the pandemic explain the high quantity of financial penalties. Encompass Corporation leading regulation expert Dr Henry Balani says: “The pandemic has provided criminals with the opportunity to defraud, launder and perpetrate other forms of financial crime with more efficiency than ever before. “Lockdown, and the resulting…

FCA Fines HSBC £64m for Failings in its AML Processes

FCA, Money Laundering, Regulatory Fines
Banking giant HSBC has been fined £63.9 million by the UK’s Financial Conduct Authority (FCA) for failings in its anti-money laundering (AML) processes. The FCA claims HSBC’s transaction monitoring systems showed “serious weaknesses” over a period of eight years from March 2010 to March 2018. The regulator says HSBC did not dispute its findings and agreed to settle “at the earliest possible opportunity”. As a result, the bank’s total fine was discounted by 30% from £91,352,600 down to £63,946,800. In particular, the FCA says HSBC failed to “consider whether the scenarios used to identify indicators of money laundering or terrorist…

FCA Fines Sunrise Brokers LLP £642,400 for Serious Financial Crime Control Failings

FCA, Money Laundering, Regulatory Fines
Sunrise Brokers LLP has been fined over £600,000 for deficient anti money laundering systems and controls. This is the second case brought by the FCA in relation to cum-ex trading, dividend arbitrage and withholding tax (WHT) reclaim schemes. The first FCA case relating to cum-ex trading concluded in May 2021. The FCA found that Sunrise had deficient systems and controls to identify and mitigate the risk of facilitating fraudulent trading and money laundering in relation to business introduced by the Solo Group, between 17 February 2015 and 4 November 2015. On review it was found that the Solo trading throughout…

Are Trade Finance Firms Failing to Tackle Crime Risks

FCA, Financial Crime
UK trade finance firms are failing to assess their financial crime risks adequately, according to regulators. These firms must fundamentally reassess their anti-crime regime, said the Financial Conduct Authority (FCA) as it promised to step up policing efforts. But experts say trade finance firms also lack the skills and technology necessary to achieve adequate compliance. Trade finance covers a variety of instruments that support international trade, including credit, factoring, and insurance. These mitigate risks such as currency fluctuations, political instability, non-payment, and counterparty default. But the complex nature of trade finance leaves it open to abuse by international criminals. A…

FCA has increased surveillance over last 12 months

FCA, Money Laundering
The Financial Conduct Authority (FCA) has highlighted the importance of anti-money laundering (AML) and said that it has increased its surveillance. Two of its biggest sanctions in the last 12 months related to failures to address financial crime and AML risks. Speaking at the AML & ABC Forum 2021, Mark Steward, executive director of enforcement and market oversight at the FCA, said that the City regulator currently has 42 AML investigations ongoing – 25 into firms and 17 against individuals. These involve, for example, systems and controls over politically exposed persons, customers with significant cash-intensive operations, correspondent banking and trade…

CP20/17: Extension of Annual Financial Crime Reporting Obligation

FCA
Why we are consulting Our annual financial crime reporting obligation shows us the potential money laundering risk faced by a firm, based on its regulated activities and the nature of its customers. The obligation is set out in our Handbook SUP 16.23 Annual Financial Crime Report (REP-CRIM). When we introduced it, we committed to consulting on any future policy change and providing a cost benefit analysis. We currently assess whether REP-CRIM applies by looking at firm type, eg banks, building societies and mortgage lenders and activity type, eg intermediaries, e-money institutions and consumer credit firms. Approximately 2,500 of the 23,000…