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UK financial services regulators lay down a marker on money laundering in the capital markets

In a report published on 10 June, the Financial Conduct Authority has set out its assessment of the money laundering risks and vulnerabilities in the capital markets. The report recognises that this is an area that historically may not have been specifically addressed by firms’ systems and controls. Although it is aimed at helping firms with developing appropriate compliance arrangements rather than formally assessing or criticising firms’ systems and controls, it identifies some areas in which the FCA has found a lack of awareness of risks and provides firms with clear reminders of their obligations under UK financial services and wider anti-money laundering (“AML”) legislation. Some of the FCA’s largest fines to date have been imposed for AML related shortcomings in relation to wholesale markets activity. The report reminds firms and individuals in all sectors that enforcement in this area is a priority.

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UK Home Affairs Committee – Evaluating the National Crime Agency

Time to Read: 1 minutes Practices: Anti-Corruption / International Risk

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On 17 February, the House of Commons Home Affairs Committee published its report on the architecture of policing in the United Kingdom.1  This report follows a period of five years of restructuring and reshaping policing at the national level in the United Kingdom, all of which was done to improve efficiency and effectiveness. One such significant change was the replacement of the Serious Organised Crime Agency (“SOCA”) with the National Crime Agency (“NCA”).

The most interesting aspect of this report is not what it says, but what it does not say. Despite ongoing debates about how serious financial crime should be policed, no mention is made of the Financial Intelligence Unit (which sits inside the NCA) or any, often discussed, potential merger with the Serious Fraud Office (which is currently independent).

Even more conspicuously, there is no mention of the brand new UK Anti-Corruption Plan, which sets out nearly ten projects, that are directly assigned to the NCA, for decreasing corruption in the UK and overseas. It remains unclear what parts of the NCA will take responsibility for these projects, and this report on the structure of policing might have been expected to shed further light on who will undertake these activities. These projects range from establishing a national multi-agency intelligence team on serious bribery and corruption to building relationships with regulators and professional bodies to provide effective support to law-abiding professionals.

One area in which the report is forthcoming, however, is the NCA’s record of asset recovery. The Home Affairs Committee was roundly critical of the NCA progress, finding that assets were not being recovered “…in sufficient volume to justify a budget of half a billion [pounds].” The Committee insists that the NCA must not only do more but also produce public benchmarks against which it can be measured. SOCA was widely considered to have been ineffective in this area, and in part this led to its replacement. It will be interesting to see if the NCA can turn the corner and make real progress on asset recovery.

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