The industry’s resistance to, and its detection and reporting of, criminal activity (and suspicions of such) remains at the top of the regulators’ agendas, and seems to be drawing increasing political attention. TISA’s Financial Crime Working Group keeps up to date with developments.
View a list of recent publications related to financial crime below
Viiew a list of recent financial crime related press releases below
Here we publish summaries of recent events that are likely to be of interest to MLROs and other FC/AML professionals in the industry. Members are welcome to reproduce any of the content shown here in their internal briefings to colleagues.
On 16 April 2019 the EU implemented new rules to protect whistle-blowers revealing breaches of EU law, including breaches relating to financial services and money laundering. Designed to improve on and harmonise the currently patchy protections on offer across the EU, the directive is deadline for implementation across the 28 (or 27) countries by May 2021. It will allow whistle-blowers to disclose information either internally to the legal entity concerned or directly to competent national authorities, as well as to relevant EU institutions, bodies, offices and agencies.
If adopted in the UK the new laws will broaden whistleblowing protections in the UK to cover more people with public interest concerns such as job applicants, non-executive directors, volunteers and self-employed workers. It will also introduce the requirement for a whistleblower regulator in EU member countries.
The UK already has protections under the Public Interest Disclosure Act 1998 but the new directive will enhance protections in the UK. The UK government is not expected to oppose implementation of the new EU laws but it has yet to explicitly confirmed it will bring them into UK law after Brexit.
On 15 April 2019 HMT published its Consultation Paper inviting views on the steps that the government proposes to take to meet the UK’s expected obligation to transpose the Fifth Money Laundering Directive into national law in January 2020. The Directive:
The deadline for responses to the Consultation is 10 June 2019. If any TISA members would like to take part in discussions leading to a response from TISA to the Consultation paper please contact Andy Gordon on email@example.com
On 9th April 2019 the FCA fined Standard Chartered Bank a cool £102,163,200 – the second largest financial penalty for AML controls failings ever imposed by the FCA – for AML breaches in two higher risk areas of its business; its UK Wholesale Bank Correspondent Banking business, and its branches in the United Arab Emirates (UAE).
The FCA found serious and sustained shortcomings in Standard Chartered’s AML controls relating to customer due diligence and ongoing monitoring. Standard Chartered failed to establish and maintain risk-sensitive policies and procedures, and failed to ensure its UAE branches applied UK equivalent AML and counter-terrorist financing controls.
The FCA also found significant shortcomings in Standard Chartered’s own internal assessments of the adequacy of its AML controls, its approach towards identifying and mitigating material money laundering risks and its escalation of money laundering risks. These failings exposed Standard Chartered to the risk of breaching sanctions and increased the risk of Standard Chartered receiving and/or laundering the proceeds of crime.
Mark Steward, Director of Enforcement and Market Oversight at the FCA, said: ‘Standard Chartered’s oversight of its financial crime controls was narrow, slow and reactive. These breaches are especially serious because they occurred against a backdrop of heightened awareness within the broader, global community, as well as within the bank, and after receiving specific attention from the FCA, US agencies and other global bodies about these risks.’
On 14th March 2019 the Select Committee on the Bribery Act 2010 published its Report following its post-legislative scrutiny of the Bribery Act 2010. It had also been asked to consider deferred prosecution agreements (‘DPAs’) as they relate to bribery and how they have affected the conduct of companies both to prevent corruption, and in the investigation of corruption once it is uncovered.
In his evidence before the Select Committee the Solicitor-General stated that one of his goals is to enhance the UK’s reputation for being a responsible jurisdiction within which to conduct economic activity. He explained that one way of achieving this aim is to enact an offence of ‘failing to prevent economic crime’. In doing so, he referred to two current Acts; the Bribery Act 2010, and the Criminal Finances Act 2017, which work in importantly different ways:
If the Solicitor General’s recommendations are followed up the policy-makers will need to decide which approach to adopt; that of the Bribery Act or that of the Criminal Finances Act. In other words, they will need to decide whether a corporate should be criminally liable for ‘failing to prevent’ offences that are committed by employees purely for their own self-enrichment, or which benefit a criminal third party, rather than with the aim of benefiting the corporate.
Member firms can get in touch with our Financial Crime technical team and, where relevant, the Financial Crime Working Group for assistance with their Financial Crime queries by clicking the link below.