SYSC326 - News (2023)

News (2023)

Links to articles and announcements on financial crime.

2024 2023 2022 2021 2020 2019

HMT / OFSI - Financial Sanctions Guidance
22-12-23 - The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury (HMT), is the authority with responsibility for the implementation of financial sanctions in the UK. HMT/OFSI updated its published guidance relevant to: (i) General awareness (i.e., taking account of relevant case law at the date of publication); (ii) Monetary penalty and enforcement; and (iii) Russia. Guidance does not represent legal advice. If you are unsure about legal obligations relevant to sanctions risk, you should consider taking independent legal advice.

HM Treasury - The Money Laundering and Terrorist Financing (Amendment) Regulations 2023/1371
14-12-23 - These Regulations amend the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (S.I. 2017/692) (the MLRs) to secure the result referred to in section 77(3) of the Financial Services and Markets Act 2023 (c. 29); that for the purposes of assessments under regulation 35(3) of the MLRs, where the customer is a domestic PEP (a politically exposed person), or a family member or known close associate of a domestic PEP, the starting point for the assessment is that the customer presents a lower level of risk than a non-domestic PEP. The extent of enhanced customer due diligence measures to be applied in relation to that customer should be less than for non-domestic PEPs, unless enhanced risk factors apply. (Date in force: 10 January 2024).

UK Gov - Establishment of the Office of Trade Sanctions Implementation (OTSI)
11-12-23 - A UK Government Press Release announces that Companies who are found to be dodging strict trade sanctions, including those imposed since the war in Ukraine, will face tougher penalties with the creation of a new Office of Trade Sanctions Implementation (OTSI). The OTSI will launch in early 2024 and be responsible for the civil enforcement of trade sanctions, including those against Russia. The unit will help businesses comply with sanctions and investigate potential breaches, issuing civil penalties and referring cases to HMRC for criminal enforcement where needed. Its remit will involve activity by companies who may be avoiding sanctions by sending products through other countries.

OFSI / FCDO Ownership and Control: Public Officials and Control guidance
17-11-23 - The OFSI (Office of Financial Sanctions Implementation, part of HM Treasury) and the FCDO (Foreign, Commonwealth & Development Office) issued joint ownership and control guidance relating to public officials and control in UK sanctions regimes. The guidance is applicable to all sanctions regimes, including the Russia (Sanctions) (EU Exit) Regulations 2019.

FSA - Firms should strengthen anti-fraud systems and must treat victims of fraud better
07-11-23 - The Financial Conduct Authority (FCA) published summary findings from its work with payment service providers (PSPs), which noted that PSP's should be doing more to protect consumers from fraud, including authorised push payment (APP) fraud. The review found: (a) Firms can do more to strengthen their systems designed to detect and prevent fraud; (b) There is not enough focus on delivering good consumer outcomes in many firms; (c) Some firms could do more to improve the support they offer to victims of fraud; (d) Poor complaint handling, including firms often taking too long to respond. Customers were provided with decision letters that were sometimes unclear, confusing, or included unhelpful and, on occasion, accusatory language; (e) Firms are not fully considering characteristics of customer vulnerability when making decisions about fraud claims and complaints.

UK Parliament - Economic Crime and Corporate Transparency Act 2023
26-10-23 - The Economic Crime and Corporate Transparency Act 2023 received Royal Assent on 26 October 2023. The new law is designed to: (a) prevent organised criminals, fraudsters, kleptocrats and terrorists from using companies to abuse the UK’s open economy; (b) strengthen the UK’s broader response to economic crime; and (c) support enterprise by enabling Companies House to deliver a better service. The commencement date for the section 199 offence (failure to prevent fraud) is yet to be determined, but will be after guidance has been published by the Secretary of State under section 204(3). The government intends to initiate a consultation in 2024, on the content of guidance to be introduced on ‘reasonable fraud prevention procedures’ and the new failure to prevent fraud offence.

FCA - Cryptoasset registration: information for applicants
26-10-23 - Any firm or sole practitioner intending to support cryptoasset activity in the UK by way of a business, and the activity is in scope of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR), must be registered with the Financial Conduct Authority (FCA) before carrying out any cryptoasset activity. To help applicants, the FCA has published a list of typical questions firms or sole practitioners' may have when they intend to apply to the FCA to be a regulated provider of crypto-asset services. The regulator's commentary identifies that anti-money laundering, counter-terrorist financing (AML/CTF) and Proliferation Finance (PF) are the primary focuses when assessing applications.

FCA - Proceeds of fraud - Detecting and preventing money mules
19-10-23 - The Financial Conduct Authority (FCA) shared key findings from a review of payment account providers’ systems and controls against money mule activity so that others can learn from it. The regulator outlines its key findings, including examples of good practice, areas for improvement, and how firms manage the risks of money mule accounts in a proportionate way. The FCA expects firms to take a proactive and proportionate approach to address the problem of money mule activity. This entails strengthening controls during onboarding, improving transaction monitoring to detect suspicious activity involving money mules, and optimising reporting mechanisms for swift action. Additionally, firms should proactively raise consumer awareness about the risks of acting as a money mule in order to protect them. These measures will help firms reinforce their controls in line with the FCA's recommendations.

JMLSG - Revisions to Paragraph 5.3.129A
13-10-23 - The Joint Money Laundering Steering Group (JMLSG) published final amendments to Paragraph 5.3.129A (relating to discrepancy reporting) within Part I Chapter 5 of its Guidance. The revisions have been submitted to HM Treasury for Ministerial approval, and may be accessed under the “Revisions” tab on the JMLSG website.

FCA - ADM Investor Services International Limited fined £6.5m for serious financial crime control failings
02-10-23 - The Financial Conduct Authority (FCA) fined ADM Investor Services International Limited (ADMISI) £6,470,600 for serious financial crime control failings. The nature of ADMISI’s business and client base presented potentially high levels of money laundering risk because of its business model, the geographical location of its customers, the proportion of its business involving high-risk clients and because it had Politically Exposed Persons as clients. The FCA raised concerns with ADMISI in 2014 about its AML systems, including the absence of a formal process to classify customers by risk. The FCA expected ADMISI to make improvements. However, during a 2016 firm visit, the FCA found significant failings remained and also identified new and more systemic, failings. For example, it noted that ADMISI had not conducted a firm-wide money laundering risk assessment and the policies were outdated and referred to repealed legislation.

FCA - Supervision strategy for Corporate Finance Firms
28-09-23 - Among themes identified in a Dear CEO letter to Corporate Finance Firms (CFF), the Financial Conduct Authority (FCA) identifies CFFs may deal with overseas clients and investors or advise on cross-border transactions. Overseas activity and complex corporate structures, often involving offshore vehicles and trusts, can make it difficult to identify the ultimate source or recipient of funds raised, or counterparty to a transaction. CFFs that do not undertake robust financial crime due diligence in the course of their business can cause significant harm to markets and consumers. Further, in light of the evolving UK and international sanctions regime since the Russian invasion of Ukraine, CFFs that do not regularly test and update their financial crime systems and controls can be more susceptible to a potential sanctions breach from their activity. The regulator warns that where it identifies material failings it will consider the need for criminal, civil or supervisory sanctions to provide effective deterrents. The regulator will hold senior management to account where firms fail to address risks and remedy failings and to embed a culture of compliance.

FT - Santander ditched EY as financial crime consultant over alleged failings
26-09-23 - A Financial Times (FT) article reports that consultancy firm EY refunded c.£15 million to Santander’s UK business after failings in its anti-financial crime work for the bank. The Financial Conduct Authority (FCA) includes Ernst & Young LLP in its Skilled Person Panel, the members of which are recognised by the regulator as having skills and technical expertise in financial crime.

FCA - Priorities for wholesale banks active in the UK
20-09-23 - The Joint Money Laundering Steering Group (JMLSG) received HM Treasury ministerial approval of the latest revisions to Part II Sector 22 (Cryptoasset providers and custodian wallet providers) of its Guidance. This includes the new Sector 22 Annex 1 relating to cryptoasset transfers (Travel Rule) and related updates to Sector 22.

FCA - Priorities for wholesale banks active in the UK
08-09-23 - In a letter to chief executives of wholesale banks active in the UK, the Financial Conduct Authority (FCA) describes its supervisory work programme for the sector over the next two years. The FCA expects the letter's content to be discussed by Board members in the respective firms, to consider how it applies to their business and where necessary, to take action. The letter mentions conduct risk linked to financial crime, market abuse and conflicts of interest. The regulator is concerned that the external environment may impact the management of these risks through cuts in the control framework, by short term commercial interests being prioritised over regulatory obligations because of revenue pressure or by employees not following procedures and processes. The FCA intends to test how banks control these risks via in person supervisory assessments.

FCA - Sanctions systems and controls: firms’ response to increased sanctions due to Russia’s invasion of Ukraine
06-09-23 - The Financial Conduct Authority (FCA) sets out key findings from the regulator's assessments of sanctions systems and controls in financial services firms. The article includes examples of good practice and areas for improvement, to help firms deliver even greater compliance with sanctions. The regulator expects firms to consider how its findings might apply to a firm’s sanctions systems and controls and to take steps to address where appropriate.

FCA - Launches review of treatment of Politically Exposed Persons
05-09-23 - The Financial Conduct Authority (FCA) set out issues it will consider as part of a review of the treatment of domestic Politically Exposed Persons (PEPs) by financial services firms. Review coverage will consider how firms are: applying the definition of PEPs to individuals; conducting proportionate risk assessments of UK PEPs, their family members and known close associates; applying enhanced due diligence and ongoing monitoring proportionately and in line with risk; deciding to reject or close accounts for PEPs, their family members and known close associates; effectively communicating with their PEP customers; and keeping their PEP controls under review to ensure they remain appropriate. The review will report by the end of June 2024.

FCA - Cryptoasset AML / CTF regime: feedback on good and poor quality applications
01-09-23 - The Financial Conduct Authority (FCA) provides feedback on good and poor quality applications made to the regulator under the money laundering regulations. The feedback and supporting guidance is intended to help Cryptoasset firms when applying for registration.

OFSI - Wise Payments Limited
31-08-23 - The Office of Financial Sanctions Implementation (OFSI), part of HM Treasury, issued a report in accordance with s149(3) of the Policing and Crime Act 2017 ('PACA') against Wise Payments Limited ('Wise') for breaching regulation 12 of The Russia (Sanctions) EU Exit Regulations 2019 ('the Russia Regulations'). OFSI refers to the use of this power as a Disclosure. The Disclosure relates to a cash withdrawal of £250 made from a business account with Wise held by a company owned or controlled by a person designated under the Russia Regulations ('the Designated Person'). In permitting the withdrawal, Wise made funds available to a company owned or controlled by a designated person.

JMLSG - New Guidance on cryptoasset transfers
31-08-23 - The Joint Money Laundering Steering Group (JMLSG) published final revisions to Sector 22 (Cryptoasset providers and custodian wallet providers) in Part II of its Guidance. The new guidance relates to implementation of the Travel Rule for cryptoasset transfers in the UK. The proposed text has been submitted to HM Treasury for Ministerial approval, and may be accessed under the 'Revisions tab' of the JMLSG website.

FCA - UK cryptoasset businesses and the Travel Rule
17-08-23 - The Travel Rule advances global anti-money laundering (AML) and counter-terrorist financing (CTF) efforts by helping cryptoasset businesses detect suspicious transactions and carry out effective sanctions screening. From 1 September 2023, cryptoasset businesses in the UK will be required to collect, verify and share information about cryptoasset transfers (i.e., the ‘Travel Rule’). In June 2023, the Financial Action Task Force (FATF) highlighted different timelines for enforcement of the Travel Rule across jurisdictions. As a result, the Financial Conduct Authority (FCA) has worked with the industry to provide guidance on how to comply and what the regulator reasonably expects of firms ahead of other countries following the UK’s position, when: (a) Sending a cryptoasset transfer to a jurisdiction without the Travel Rule; and (b) When receiving a cryptoasset transfer from a jurisdiction without the Travel Rule. Firms have until 25 August 2023 to input to the guidance.

FCA - Politically Exposed Persons invited to share their experiences
15-08-23 - The Financial Conduct Authority (FCA) will be undertaking a review to assess how FCA regulated firms are complying with their legal and regulatory obligations regarding Politically Exposed Persons (PEPs), their relatives and known close associates, and firms' application of FCA guidance FG17/6. Review terms of reference should be published in September and the review completed by the end of June 2024. To inform their approach the FCA has invited UK PEPs to tell the regulator about their experiences of dealing with firms, particularly where this has proven to be negative. Review findings will inform any subsequent steps and measures, which may include amending FG17/6.

JMLSG - Revision to Part I Paragraph 5.3.89 (Where identity is verified electronically)
01-08-23 - The Joint Money Laundering Steering Group (JMLSG) published a revision to Paragraph 5.3.89 in Part I of its Guidance. The proposed text has been submitted to HM Treasury for Ministerial approval, and may be accessed under the 'Revisions tab' of the JMLSG website.

JMLSG - Cryptoasset providers and custodian wallet providers
28-07-23 - The Joint Money Laundering Steering Group (JMLSG) published proposed amendments to Sector 22 (Cryptoasset providers and custodian wallet providers) in Part II of its Guidance. JMLSG guidance is intended to assist financial sector firms on operational implementation of UK anti money laundering (AML) and counter terrorist financing (CTF) legislation and the regulations prescribed pursuant to legislation. The text proposed is available under the 'Consultations tab' of the JMLSG website. Comments on proposed revisions should be submitted by 25th August 2023.

NCA - National Strategic Assessment 2023
18-07-23 - The National Crime Agency (NCA) published its National Strategic Assessment of Serious and Organised Crime, covering the period January to December 2022. In his introduction to the report, the NCA's Director General highlights that the threat to the UK from serious and organised crime continues to grow. An increasing threat has been identifed across Money Laundering, Fraud, Drugs, Modern Slavery & Human Trafficking, Organised Acquisitive Crime and Organised Immigration Crime. No material change has been identified for Child Sexual Abuse, Cyber Crime and Firearms. The report is available on the NCA website.

SFO - Annual Report & Accounts 2022-23
18-07-23 - The Serious Fraud Office's (SFO's) Annual Report and Accounts for the financial year 2022-23 was presented to Parliament. With regard to the Economic Crime and Corporate Transparency (ECCT) Bill, the SFO's report includes "We are following developments in Parliament on the ECCT Bill closely as we have a particular interest in a new ‘failure to prevent fraud’ offence. This change, if enacted, would mean we could hold corporate executives to account on fraud in the same way as we already do with bribery – a potential game changer."

Supreme Court - APP fraud victim cannot bring a claim against their bank for breach of the Quincecare duty
13-07-23 - Authorised push payment (APP) fraud relates to when a bank's customer has been deceived by a fraudster, resulting in the customer issuing an instruction to their bank to transfer money from their account to an account controlled by the fraudster. The Quincecare duty encourages banks not to act on payment instructions when reasonable grounds exist (for the relevant bank to believe) that a payment instruction is an attempt to misappropriate funds of the customer. In 2018 a husband and wife were victim to a fraud, having been deceived by criminals into instructing their account holding Bank to transfer £700,000 in two payments from a current account with the Bank to bank accounts in the United Arab Emirates. The instructions were carried out and the money was lost. The wife contended that the Bank owed a duty under its contract with her as the customer or under common law not to carry out payment instructions if - as alleged - the Bank had reasonable grounds for believing that she was being defrauded. Following proceedings in the High Court and a subsequent appeal to the Supreme Court, the Supreme Court unanimously allowed the appeal, holding that the Bank did not owe the alleged duty to the customer. The Respondent's argument relied heavily on the case of Barclays Bank plc v Quincecare Ltd, where a court held that a bank which receives an instruction from an agent of the customer to make a payment owes a duty to its customer not to carry out the instruction if the bank has reasonable grounds for believing that the agent is defrauding the customer by using the money for the agent's own purposes. More case-specific detail is in the Supreme Court Press Summary, which noted "This reasoning does not apply to cases like this one where there is no agent involved and the customer herself gives a payment instruction to the bank. In this situation the validity of the instruction is not in doubt. Provided the instruction is clear, no enquiries are needed to clarify or verify what the bank is authorized and required to do. Unless otherwise expressly agreed, the bank's duty is to execute the instruction and any refusal or failure to do so will be a breach of duty by the bank."

EBA - Opinion on money laundering and terrorist financing risks affecting the EU’s financial sector
13-07-23 - The European Banking Authority (EBA) published its fourth biennial Opinion on the risks of money laundering and terrorist financing (ML/TF) affecting the European Union’s financial sector. It also sets out what competent authorities and EU co-legislators can do to mitigate those risks. Some of the ML/TF risks identified in this Opinion, such as those associated with crypto assets, innovative financial services, the identification of beneficial owners and terrorist financing, had already been identified in previous Opinions on ML/TF risks and continue to be relevant today. Other risks that were highlighted in 2021, including those associated with Covid-19 and de-risking, are starting to decrease.

OFSI - Update to Licensing Process: Returning Incomplete Applications
12-07-23 - In response to the illegal invasion of Ukraine the Office of Financial Sanctions Implementation (OFSI) implemented a temporary variation to its Licensing Process when incomplete applications were received. Temporary arrangements involved OFSI repeatedly engaging with applicants until such a time as sufficient details and evidence had been received and a decision could be taken. However, as reported in its blog, OFSI intends to end this temporary arrangement and resume returning applications which are not complete at the time of receipt.

FCA - Bastion Capital London Limited fined £2.5m for serious financial control failings
12-07-23 - The Financial Conduct Authority (FCA) fined Bastion Capital London Limited (in liquidation) £2.5m for serious financial crime control failings in relation to cum-ex trading. They failed to manage the risk of being used to facilitate fraudulent trading and money laundering. Between January 2014 and September 2015 Bastion executed trading to the value of approximately £49bn in Danish equities and £22.5bn in Belgian equities on behalf of Solo Group clients. The purported trades were carried out in a way that was highly suggestive of financial crime. Trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium. Bastion also ignored or failed to notice a series of red flags in relation to certain trades, which had no apparent economic purpose except to transfer funds from the Solo Group’s controller to his business associates.

HMT - Reforming AML/CTF supervision
30-06-23 - HM Treasury published a consultation on 'Reform of the anti-money laundering and counter-terrorism financing (AML/CTF) supervisory system'. A 2022 review of the UK’s AML/CTF regulatory and supervisory regime concluded that while there had been improvement to the regime, some weaknesses in supervision may need to be addressed through structural reform. The Review set out four possible models for an AML/CTF supervisory system. The consultation develops these four models, assessing them against three consultation objectives. Respondents’ are invited to submit views regarding the potential benefits and disbenefits of each potential reform model. The consultation closes on 30th September 2023.

UK Gov - Financial Services and Markets Act 2023
29-06-23 - The Financial Services and Markets Act 2023 (FSMA 2023) received Royal Assent, influencing a number of reforms to the regulation of financial services in the UK. Amongst measures introduced relevant to customer due diligence (CDD) is Sec. 77 (Politically exposed persons: money laundering and terrorist financing) which, with regard to domestic Politically Exposed Persons (PEPs), amends Part 3 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). In overview, where a customer is a domestic PEP, or a family member or a known close associate of a domestic PEP — (a) the starting point for assessment under regulation 35(3) of MLR 2017 is that the customer presents a lower level of risk than a non-domestic PEP, and (b) if no enhanced risk factors are present, the extent of enhanced customer due diligence (EDD) measures to be applied in relation to that customer is less than the extent to be applied in the case of a non-domestic PEP. Sec 78 of FSMA 2023 requires the FCA must review its guidance on PEPs given under section 139A of FSMA 2000 and in compliance with the requirements under regulation 48 of MLR 2017. Sections' 77 & 78 entered into force on 29 June 2023.

FOS - Fraud and scam complaints
28-06-23 - Data from the Financial Ombudsman Service (FOS) relating to the 2022/23 financial year, identified the FOS received 21,918 fraud and scam complaints, up by almost a fifth when compared to complaints received in 2021/22. Of these, 10,985 were about authorised push payment (APP) scams - a 17% increase on complaints received in 2021/22. The FOS also saw a higher proportion of complex scam complaints. Over a third of APP scam complaints were about investment scams. The majority of complaints include an element of cryptocurrency.

HMT - High Risk Third Countries
27-06-23 - The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘MLRs’) require the UK regulated sector to apply enhanced customer due diligence in relation to high-risk third countries. HM Treasury issued an updated Advisory Notice reflecting changes to the UK’s high-risk third countries list, to align with removals agreed by the Financial Action Task Force (FATF).

JMLSG - Ministerial approval of JMLSG Guidance
27-06-23 - The Joint Money Laundering Steering Group (JMLSG) received Treasury Ministerial approval of its guidance material published in March 2023, November 2022 and August 2022. This includes various revisions to Part I and Part II. The Guidance may be found under the “Current Guidance” tab.

FATF - Virtual Assets: Targeted Update on Implementation of the FATF Standards on Virtual Assets and Virtual Asset Service Providers
27-06-23 - In 2019, the Financial Action Task Force (FATF) extended its anti-money laundering and counter-terrorist financing (AML/CFT) measures to virtual assets (VA) and virtual asset service providers (VASPs) to prevent criminal and terrorist misuse of the sector. Since then, FATF has produced three reviews on implementation of its standards on VAs and VASPs. The latest report provides an update on country compliance with FATF’s Recommendation 15 and its Interpretative Note (R.15/INR.15), including the Travel Rule, and updates on emerging risks and market developments, including on Decentralized Finance (DeFi), Peer-to-Peer transactions (P2P), and Non-Fungible Tokens (NFTs), unhosted wallets, and stablecoins. The FATF calls on all countries to rapidly implement the FATF’s Standards on VAs and VASPs, including the FATF’s Travel Rule.

EC - MLD IV Delegated Regulation
26-06-23 - The Official Journal of the European Union identifies: Commission Delegated Regulation (EU) 2023/1219 of 17 May 2023 amending Delegated Regulation (EU) 2016/1675 as regards adding Nigeria and South Africa to the list of High-risk third countries set out in the table in point I of the Annex and deleting Cambodia and Morocco from that table.

HMRC - £3.2m money laundering penalties
08-06-23 - Xpress Money Services Ltd (XMS) is one of a number of businesess fined a total of £3.2m for breaching anti-money laundering rules by HM Revenue and Customs (HMRC). XMS was fined £1.4m for failing to carry out risk assessments, not having appropriate anti-money laundering controls, and failing to conduct proper due diligence checks. Businesses which do not follow anti-money laundering regulations can be fined and lose their licence to operate in the UK.

FCA & SFO - Principles of Co-operation between
05-06-23 - The Serious Fraud Office (SFO) and Financial Conduct Authority (FCA) published ‘Principles of Co-operation’, to promote and facilitate information sharing between the FCA and SFO. The document's content includes - "Senior leaders from both the SFO and the FCA’s Enforcement and Market Oversight Division, will meet on a regular basis, along with others from their respective organisations, to discuss matters of key importance to both organisations relating to strategy, policy and on-going collaboration generally. In addition, they will discuss the status of any on-going investigations being conducted by the SFO and the FCA as appropriate including but not limited to, cases of mutual interest cases where one organisation is assisting the other or any relevant high-profile cases."

FCA - ED&F Man Capital Markets Ltd fined £17.2m for serious failings which enabled millions in illegitimate tax reclaims
05-06-23 - The FCA has fined ED&F Man Capital Markets Ltd (MCM) £17,219,300 for serious failings in its oversight of cum-ex trading. These failings allowed MCM to collect fees for trading strategies designed to enable its clients to illegitimately reclaim tax from the Danish authorities. The Final Notice includes mention of the Compliance function failing to consider what risks might arise (aside from money laundering and market abuse which were discounted).

EBA - EBA consults on amendments to AML Guidelines
31-05-23 - The European Banking Authority (EBA) launched a public consultation on amendments to its Guidelines on money laundering and terrorist financing (ML/TF) risk factors. Changes proposed extend the scope of the Guidelines to include crypto-asset service providers (CASPs). The scope of the consultation, and of the consultation questions, is limited to the amendments and additions. The consultation runs until 31 August 2023.

JMLSG - Proposed revisions to AML Guidance
25-05-23 - The Joint Money Laundering Steering Group (JMLSG) published proposed revisions to its good practice guidance for regulated sector firms, to take account of amendments relating to discrepancy reporting, as introduced by The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (affecting Part I Chapter 5 Paragraph 5.3.129A). An amendment is also proposed to Part I Chapter 5 Paragraph 5.3.89 relating to the mitigation of impersonation risk. The relevant text is available on the JMLSG website (under the Consultations tab). Comments on the proposed revisions should be sent to the JMLSG no later than 26th June 2023.

FCA - Warning Notice Statement 23/5
18-05-23 - The Financial Conduct Authority (the FCA) issued warning notices to three individuals in February 2023, proposing to take action in respect of conduct outlined in Warning Notice Statement 23/5. The FCA must issue a warning notice when it proposes to take certain enforcement action. The Warning Notice is not finalised as representations have been submitted to the Regulatory Decisions Committee (RDC). The notice identifies the FCA considers that Individual B (one of the parties) who held the compliance oversight and money laundering reporting controlled functions, in the period January 2016 to August 2019, failed to act with integrity, due skill, care and diligence.

UK Finance - Annual Fraud Report
11-05-23 - UK Finance is the collective voice for the banking and finance industry, representing more than 300 firms. Its Annual Fraud Report estimates the amount of money stolen by criminals through financial fraud in 2022. UK Finance members include financial providers, credit, debit and charge card issuers, and card payment acquirers. Over £1.2 billion was stolen through fraud in 2022, a reduction of eight per cent on 2021. The number of fraud cases across the UK was down four per cent to almost three million cases. UK Finance and its members are calling for more cross-sector action to tackle the problem at source.

UK Gov - Policy paper, Fraud Strategy 
03-05-23 - The UK Government Fraud Strategy describes - "Fraud poses a significant threat to the people, prosperity, and security of the UK. It is by far the most common crime and now accounts for over 40% of all offences in England and Wales. This strategy will tackle fraudsters head on and cut fraud by 10%, protecting the British people’s hard-earned cash from criminals and putting more fraudsters behind bars." Key commitments include: (i) Making sure every part of the system is incentivised to take fraud seriously; (ii) Improving law enforcement response to fraud; (ii) Ensuring victims of fraud are reimbursed and supported.

OPBAS - Report on legal and accountancy sector supervision 
28-04-23 - The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) is housed within the FCA and is responsible for overseeing 25 Professional Body Supervisors (PBSs) for anti-money laundering in the legal and accountancy sector. The latest OPBAS report found that professional bodies are continuing to demonstrate good levels of compliance with money laundering regulations but improvements in how effectively they supervise have not been good enough, and with many PBSs falling short of OPBAS’ expectations. For example, the report found that too many PBSs failed to share relevant information and intelligence proactively with regulators and law enforcement, and that action taken against firms who break the rules has been too slow in some cases.

Alert - Money Laundering via the Post Office 
24-04-23 - The National Economic Crime Centre (NECC) estimates that hundreds of millions are laundered each year via the Post Office. In response, the Financial Conduct Authority (FCA) published details of new measures for banks, which include: Moving towards card-based transactions and away from paying-in slips; Upskilling staff to spot patterns of suspicious activity; Enhancing banks' capabilities for monitoring for suspicious activity; and Reducing cash deposit limits at the Post Office to below the existing limit of £20,000 per transaction. Banks are expected to adopt a data-led approach and consider whether a tailored offer is appropriate. As part of its next phase of cash-based money laundering work, the FCA intends to test firms’ approaches to reducing money laundering risk for cash deposits at the Post Office and deposits through other channels.

Wolfsberg - Publication of ABC Guidance 
17-04-23 - The Wolfsberg Group published updated Anti-Bribery and Corruption Compliance Programme Guidance. Described as a risk-based approach for the development and implementation of compliance programmes to prevent, detect, and report acts of Bribery and Corruption. The Guidance incorporates learnings from enforcement actions since 2017 with updates to the red flags section and, expands the section on customer and transaction corruption risks. The guidance identifies areas of elevated risk to help the financial services industry mitigate Bribery and Corruption risks.

UKGOV - Factsheet: failure to prevent fraud offence 
11-04-23 - The government is creating a new failure to prevent fraud offence to hold organisations to account if they profit from fraud committed by their employees. The Factsheet explains organisations will be liable where a specified fraud offence is committed by an employee or agent, for the organisation’s benefit, and the organisation did not have reasonable fraud prevention procedures in place. It does not need to be demonstrated that company bosses ordered or knew about the fraud. The offence applies to all large bodies corporate and partnerships.

JMLSG - Publishes revisions to its Guidance 
17-03-23 - The Joint Money Laundering Steering Group (JMLSG) published final amendments to the text in Part II of its Guidance relating to: Sector 8 (Non-life providers of investment fund products) and Sector 9 (Discretionary and advisory investment management). The proposed amendments have been submitted to HM Treasury for Ministerial approval. The revised text can be accessed under the “Revisions” tab on the JMLSG website.

FATF - Beneficial ownership 
10-03-23 - The Financial Action Task Force (FATF) published guidance intended to help countries identify, design and implement appropriate measures in line with the revised FATF Recommendation 24 to ensure that beneficial ownership information is held by a public authority or body functioning as a beneficial ownership registry, or an alternative mechanism that enables efficient access to the information.

HOC -  Progress combatting fraud
09-03-23 - The House of Commons Committee of Public Accounts published its report ‘Progress combatting fraud’ (March 2023), which identifies: "Law enforcement is not set up to tackle the challenges presented by fraud. The volume and complexity of fraud currently overwhelms the capacity of both Action Fraud and local police forces, who lack the training and resources they need to pursue the hundreds of thousands of cases reported every year. We are also concerned that police morale is being undermined by the time it takes to investigate and prosecute fraud and the relatively short sentences handed out when prosecutions are successful." And - "The Home Office is not doing enough to influence those who are instrumental in combatting fraud. The Department is dependent on the banking, technology, telecoms and retail sectors to fight fraud, but its approach will continue to be sluggish and outmanoeuvred if it relies on purely voluntary charters with these sectors. The majority of frauds are also suspected to have an international element, but relationships with overseas criminal justice agencies are immature and threatened by the UK’s lack of domestic capacity."

FCA - HM Treasury’s Economic Crime Levy 
09-03-23 - Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR) the Financial Conduct Authority (FCA) is responsible for supervising the anti-money laundering controls of businesses offering certain services and which are registered with the FCA, as an Annex I financial institution. From July 2023 impacted businesses will pay an annual Economic Crime Levy, determined by their UK revenue. To ensure the right amount is charged, businesses must submit their data via new Reg Data Report (FIN074) from 1 April 2023. The HM Gov website describes - All small entities will be exempt, whilst medium entities will pay £10,000; large entities £36,000; very large entities £250,000.

JMLSG - Publishes revisions to its Guidance
06-03-23 - The Joint Money Laundering Steering Group (JMLSG) published final amendments to the following text in Part II of its Guidance: Sector 5 (Wealth management); Sector 6 (Financial advisers); Sector 11A (Consumer credit providers); Sector 13 (Private Equity); and Sector 22 (Cryptoasset exchange providers and custodian wallet providers). These have been submitted to HM Treasury for Ministerial approval, and may be accessed under the “Revisions” tab on the JMLSG website. Amendments have also been made to Part I Chapter 6 Paragraphs 6.70-6.71, to highlight the ability the Financial Ombudsman has to effectively handle complaints with a money laundering element. The amended paragraphs can also be accessed under the “Revisions” tab.

OFSI - General Licences
24-02-23 - The Office of Financial Sanctions Implementation (OFSI) and HM Treasury published an updated list of General Licences, issued by OFSI on behalf of HM Treasury. A General Licence allows multiple parties to undertake specified activities which would otherwise be prohibited by sanctions legislation, without the
need for a specific licence. OFSI Guidance makes clear however, that a General Licence is not substitute for a specific licence. In most cases, details of active general licences and accompanying guidance will be made available on OFSI’s website.

Wolfsberg Group - CBDDQ, FCCQ, Guidance, Glossary and FAQs
10-02-23 - The Wolfsberg Group released version 1.4 of the Correspondent Banking Due Diligence Questionnaire (CBDDQ) and version 1.2 of the Financial Crime Compliance Questionnaire (FCCQ), along with updated supporting Guidance, Glossary and FAQs documents. CBDDQ updates include a new section on Fraud and additional questions related to Whistleblower Policy, Virtual Bank License, the approval of Sanctions Policy, and other changes designed to improve the logic, usability and flow of the questionnaire. FAQ and Glossary documents have been updated to address changes in the Questionnaires.

FCA - Cryptoasset AML/CTF regime: feedback on good and poor quality applications
25-01-23 - The Financial Conduct Authority (FCA) published feedback on good and poor quality applications submitted by cryptoasset applicants under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended (MLRs). Of 300 plus applications since January 2020, the FCA had determined over 260 as of January 2023 - 41 (51%) were approved and registered, 195 (74%) were either refused or the applications were withdrawn, and the FCA rejected 29 (11%) submissions. FCA feedback, inter-alia, includes: "The applicant must appoint a Money Laundering Reporting Officer (MLRO)/ Nominated Officer with relevant knowledge, experience and training as well as a level of authority, independence and sufficient access to resources and information, to enable them to monitor and manage compliance with policies, procedures and controls to carry out their roles and responsibilities under the MLRs." and "Applicants must demonstrate a thorough understanding of the risks from dealing in cryptoassets and design a business wide risk assessment (BWRA) that is tailored to its business model."

FCA - Al Rayan Bank PLC for anti-money laundering failures fined £4.0 million for anti-money laundering failings
11-01-23 - The Financial Conduct Authority (FCA) fined Al Rayan Bank PLC (Al Rayan) £4,023,600 for failing to put in place adequate anti-money laundering (AML) controls. Between April 2015 and November 2017, Al Rayan allowed money to pass through the bank and be used within the UK without carrying out appropriate checks. The firm failed to adequately check its customers’ Source of Wealth and Source of Funds when it was required to make sure the money was not connected to financial crime. Failings were made worse by the lack of proper training provided to staff about how to handle large deposits, which further heightened the risk of money laundering and financial crime.  Al Rayan was aware of weaknesses but failed to implement effective change to fix them, despite the FCA raising concerns about inadequacies of their systems. 

FCA - Guaranty Trust Bank (UK) Limited fined £7.6 million for anti-money laundering failings
10-01-23 - In August 2013 the Financial Conduct Authority (FCA) fined Guaranty Trust Bank (UK) Limited (GT Bank) £525,000 for serious and systemic failings. The January 2023 fine of £7.6 million relates to further failures identified in GT Bank's anti-money laundering systems and controls. Between October 2014 and July 2019, GT Bank failed to undertake adequate customer risk assessments, often not assessing or documenting the money laundering risks posed by its customers. The bank also failed to monitor customer transactions and business relationships to the required standard. These weaknesses were repeatedly highlighted to GT Bank by internal and external sources, including the FCA, but despite this, GT Bank failed to take appropriate action to fix them. The majority of failings identfied had a direct bearing on GT Bank’s ability to comply with regulatory obligations. In addition to breaching Principle 3, GT Bank breached Senior Management Arrangements, Systems and Controls (“SYSC”) rules set out in the Authority’s Handbook: SYSC 6.1.1R and SYSC 6.3.1R.

UK Law - Threshold Change
05-01-23 - Under The Proceeds of Crime (Money Laundering) (Threshold Amount) Order 2022, from 5th January 2023 the £250 threshold amount specified in section 339A of the Proceeds of Crime Act 2022 (POCA), increased to £1,000 (i.e., the value of criminal property below which a bank or similar firm (a deposit-taking body, electronic money or payment institution) can carry out a transaction, in operating an account for a customer, without committing one of the main money laundering offences in sections 327 to 329 of POCA.

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