UK: FCA reveals 'large number' of money laundering investigations in pipeline.

As published on investmentweek.co.uk, Friday 5th April, 2019.


The Financial Conduct Authority (FCA) is currently pursuing a "large number" of anti-money laundering (AML) investigations, which could lead to criminal proceedings. 

Speaking in London on Thursday (4 April), FCA director of enforcement and market oversight Mark Steward confirmed the regulator is currently undertaking so-called dual track investigations, which can give rise to either criminal or civil proceedings.

Steward said: "We have a large number of investigations on foot, some of them entering important phases, tackling some very serious issues, including suspected financial crime in our markets, suspected false or misleading statements by listed issuers, and suspected significant AML system and control issues under the Money Laundering Regulations."

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The FCA, which in March doled out huge fines for transaction reporting failures to Goldman Sachs and UBS, has conducted investigations with regard to market abuse "for many years" and the new approach brings AML investigations "into line" with its established practice, he explained.

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Steward said: "I do not think there should be anything controversial here. It would be inconsistent with the investigative mindset to narrow the scope of potential outcomes provided for by the law before you have made any inquiries or been able to assess the nature of the matter under investigation."

"More importantly, I think it is time that we gave effect to the full intention of the Money-Laundering Regulations which provides for criminal prosecutions.

"In making poor AML systems and controls potentially a criminal offence, the MLRs are signalling that, in egregious circumstances, MLR failures let down the whole community."

Commenting on the regulator's ongoing investigations, Claire Simm, AML expert and managing director within the compliance and regulatory consulting practice at Duff & Phelps, said: "In the last decade, we have seen numerous high-profile enforcement actions which show that financial crime compliance remains a core priority for regulators and law enforcement agencies around the world.

"In the last five years, financial crime was found to be the second highest category for global fines levied, trailing just behind conduct of business obligations."

According to Duff & Phelps 2018 Global Enforcement Review, enforcement action fines between 2013 and 2017 for sanctions breaches, bribery, tax evasion and fraud reach $10.1bn, $5.6bn, $5.1bn and $4.4bn respectively. Meanwhile, AML saw just $3.5bn over the period.

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