COMPLIANCE SERVICES

Regulatory Update Aug 2022

In this issue we cover: Authorisations and variations of permissions Information on cost of living for authorised firms Landing slots for TPR firms FCA alternatives supervision strategy Regulatory Sandbox Improvements to the Appointed Representatives regime Strengthening financial promotion rules for high risk investments Final Notice: Citigroup Global Markets Limited A New Consumer Duty (Final Rules)…

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FCA’s Second Largest Fine for Anti Money Laundering Failings

The Financial Conduct Authority (FCA) has fined Standard Chartered Bank (SCB)£102,163,200 for Anti-Money Laundering (AML) breaches in two higher risk areas of itsbusiness, its UK correspondent banking business, and its branches in the United ArabEmirates (UAE) between November 2009 and December 2014 (the relevant period). SCBcomprises a network of more than 1,109 branches and outlets…

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FCA Introduces Permanent Ban on Binary Options to Retail Consumers

The Financial Conduct Authority has confirmed a permanent ban on the sale of binary options (Binaries) to retail consumers. All firms acting in or from the UK are permanently prohibited from selling, marketing or distributing Binaries to retail consumers as of 2 April 2019. New rules are included in the Policy Statement (PS19/11), which follows…

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Goldman Sachs Fined £34.3 million for Transaction Reporting Failures

Goldman Sachs International (GSI) has been fined by the Financial Conduct Authority (FCA) for violating transaction reporting rules (SUP 15 and 17 of the FCA Handbook) in relation to over 200 million transactions between November 2007 and March 2017. For nearly 10 years, GSI failed to ensure it provided complete, accurate and timely information in…

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Agree to disagree: FCA versus Lewis Alexander Limited

On 19 February 2019, the Upper Tribunal (the Tribunal) published its decision in LewisAlexander Limited (LAL) vs the Financial Conduct Authority (FCA). In this case LAL, a debt management firm, applied to the FCA in March 2015 for permissionto carry on the regulated activities of debt adjusting and debt counselling under Part 4A ofthe Financial…

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Communication Rules for Payment Services and E-Money Sectors

The FCA published a Policy Statement (PS 19/3) extending certain rules and guidance to thepayment services and e-money sectors. This Policy Statement follows an August 2018Consultation Paper (CP 18/21) to which only 19 organisations responded. In theconsultation the FCA proposed the application of the Principles for Business (the Principles)to these sectors, as well as to…

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FCA Ordered to Pay Compensation to Banned Chief Executive

The Financial Conduct Authority (FCA) has been directed to pay a proportion of the costsincurred by an individual following a 26 January 2019 decision from the Upper Tribunal (theTribunal) in a financial misconduct case. The Tribunal considered an application for costsmade by Alistair Rae Burns (Burns), who contended that both an FCA Decision Notice datedJuly…

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ESMA’s Notice on the Product Intervention Renewal Decision

On 23 October 2018, the European Securities and Markets Authority (ESMA) adopted a Decision to renew the restrictions on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients. ESMA published details of this decision today and confirmed that the renewal of measures will take effect from 1 November 2018 for a further three-month…

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ESMA Report on Initial Coin Offerings and Crypto-Assets

On 19 October, the European Securities and Markets Authority (ESMA) published its own internally commissioned report on initial coin offerings (ICOs) and crypto-assets (used to collectively herein to refer to coins, tokens, crypto currencies and other digital or virtual assets). The report has been produced by the Securities and Markets Stakeholder Group (the Stakeholders Group)…

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FCA confirms greater access for SMEs to Financial Ombudsman Service

On 16 October 2018, the FCA issued a Policy Statement (PS 18/21) with near-final rules which will expand access to the Financial Ombudsman Service (FOS) for small and medium-sized enterprises (SMEs). These changes include an amendment to the definition of “eligible complainant” in the Dispute Resolution rules in the FCA Handbook (DISP) to include SMEs,…

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SMCR – FCA Proposed Guidance on Statements of Responsibilities

The FCA has published a Guidance Consultation (GC 18/4) to provide practical assistance and information to firms in preparation for the extension of the Senior Managers and Certification Regime (SMCR). Under the new regime, which will apply to all FSMA authorised firms from 9 December 2019, all senior managers must have a Statement of Responsibilities…

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FCA Published 2 consultation papers with proposed changes

The FCA has published 2 consultation papers with proposed changes to the Handbook and Binding Technical Standards (BTS) (CP 18/28) and separately on the Temporary Permissions (TP) regime for inbound firms and funds (CP 18/29), which are based on a “no-deal” case scenario. These are to aid the FCA in ensuring as smooth a transition…

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FCA Review on ML & Terrorist Financing in the E-Money Sector

The FCA published a Thematic Review (TR18/3) today detailing its findings of visits to 13 Electronic Money Institutions (EMIs) to assess their anti-money laundering (AML) and counter-terrorist financing (CTF) control frameworks. The review focused on e-money products, including prepaid cards and digital wallets. Overall, the review established that the 13 firms assessed had reasonably effective…

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ESMA to Extends Restrictions on Retail CFDs

The European Securities and Markets Authority (ESMA) has agreed to renew the restriction on the marketing, distribution or sale of contracts for differences (CFDs) to retail clients, in effect since 1 August. The renew extends the temporary for a further three-months from 1 November 2018, through to February 1, 2019. The renewal includes: Leverage limits…

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Treasury Committee Report Supports Regulation of Crypto-Assets

The House of Commons Treasury Committee has published a report following an inquiry into crypto-assets launched last February, whose remit was to examine the role of digital currencies in the UK; consider the potential impact of distributed ledger technology on financial institutions and infrastructure; evaluate the regulatory response to digital currencies from the Government, the Financial…

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FCA Statement Following ESMA’s Action on CFDs

The Financial Conduct Authority (FCA) has published a statement addressing their concern that firms may consider ways to circumvent the restrictions imposed by the European Securities and Markets Authority (ESMA) on the provision of contracts for difference (CFDs) and binary options to retail clients. These measures, that have been adopted under Article 40 of the…

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FCA Is Seeking Input on PRIIPs Legislation

On 26 July 2018 the Financial Conduct Authority (FCA) published a Call for Input for firms and consumers about their initial experiences of the requirements introduced by the Packaged Retail and Insurance-based Investment Products (PRIIPs) legislation. The PRIIPs legislation, which includes the European regulation and the Regulatory Technical Standards (RTS), applies to manufacturers, and advisers…

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FCA Reveals Urban-Rural Differences in How Consumers Experience FS

The Financial Conduct Authority (FCA) has today published the latest analysis from its Financial Lives Survey 2017 on the financial situation of people across the United Kingdom and highlights where in the UK people may be more vulnerable. The survey, which is split into fifteen geographic areas across the UK is based on nearly 13,000…

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“Dear CEO” Letter to Banks on Crypto-Asset Clients and Financial Crime

The Financial Conduct Authority (FCA) has published a letter to the CEOs of UK banks suggesting good practice for handling the financial crime risks posed by crypto-assets – any publicly available electronic medium of exchange featuring a distributed ledger and a decentralised system for exchanging value (for example, Bitcoin or Ether). Whilst the FCA acknowledges…

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FCA Fines and Imposes a Restriction on Canara Bank for AML Failings

The Financial Conduct Authority (FCA) has issued a Final Notice in respect of failings of Canara Bank, one of the largest public sector banks owned by the Government of India. The FCA has fined Canara Bank £896,100 and has restricted it from accepting deposits from new customers for 147 days. Canara Bank has two branched…

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ICO Consults on Increased Powers under Data Protection Reform

The Information Commissioner’s Office (ICO) has launched a consultation to gather views on the way it plans to exercise new regulatory powers to support carry out fast-moving, detailed investigations in the public interest. Stakeholders and the public have time until the end of June to comment on the ICO’s Draft Regulatory Action Policy. The ICO’s…

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ESMA Publishes Q&As: Temporary Product Intervention Measures

The European Securities and Markets Authority (ESMA) has published its Q&As on the temporary product intervention measures adopted on the marketing, distribution, and sale of CFDs and binary options to retail clients. This first version of Q&As provides answers to practical questions in relation to: Existing contracts; Payments; Margin close-out protection; Aggregate liability; Monetary benefits;…

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ESMA Adopts Final Product Intervention Measures on CFDs

The European Securities and Markets Authority (ESMA) has formally adopted a range of product intervention measure on the provision of contracts for difference (CFDs), including rolling spot forex and financial spread bets, and binary options to retail clients. These measures have been published in the Official Journal of the European Union (OJ) today. They will…

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Data Protection Changes: email fatigue

By 25 May 2018, many of us will already be fatigued by the barrage of emails arriving into our email inboxes regarding the General Data Protection Regulation (GDPR). Companies are contacting customers on their mailing lists to get (in some cases again) affirmative opt-in consent from their subjects, apparently to comply with the GDPR. The…

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European Parliament Adopts Fifth Anti-Money Laundering Directive

  On 19 April 2018, the European Parliament adopted the Fifth Anti-Money Laundering Directive (MLD5). In its press release, the European Commission welcome the new measures and states that “ these new rules will bring more transparency to improve the fight against money laundering and terrorist financing across the European Union “. The proposal was…

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FCA Statement on Cryptocurrency Derivatives Firms

The Financial Conduct Authority (FCA) has issued a statement for those firms that offer services linked to cryptocurrency derivatives, to remind that they must comply with all relevant rules in the handbook and provisions in European Union regulations. Whilst cryptocurrencies are not currently regulated by the FCA, cryptocurrency derivatives can be financial instruments under the…

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FCA Consultation on the Financial Crime Guide for Firms

On 27 of March 2018, the FCA has published a guidance consultation (GC 18/1) on amending its Financial Crime guide for firms. The guidance, which is not binding on firms, is intended to enhance firms’ understanding of the FCA’s expectations on firms’ own financial crime systems and controls. The proposed changes include: An additional chapter…

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ESMA Agrees to Prohibit Binary Options and Restrict CFDs

The European Securities and Markets Authority (ESMA) has agreed a range of product intervention measures that will be applied to the provision of contracts for difference (CFDs), including rolling spot forex and financial spread bets, and binary options to retail clients. The reason for this decision is the significant protection concern in the offer of CFDs…

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Women in Finance: Still a Long Way to Go

On 22 March 2018, Megan Butler, FCA Executive Director of Supervision – Investment, Wholesale, and Specialists, delivered a speech at the Women in Finance Summit held in London. The following is a summary of the speech with some key points for reflection. Ms Butler initially stated that she feels optimistic about the possibility of a…

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FCA Paper on Transforming Culture in Financial Services

On 12 March 2018, the Financial Conduct Authority (FCA) published a Discussion Paper (18/02) about Transforming Culture in Financial Services, a set of 28 essays by industry leaders and academics, that discuss what “right” culture in a firm might look like, the role of regulation and regulators, and how firms might go beyond rules and…

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