The PRA has started another round of cross-firm reviews of the accuracy of 31st December 2016 COREP returns. We understand the reviews cover an expanded set of returns than was specified in a Dear CEO letter sent to some firms in early 2016, adding the FSA001 (balance sheet), COR012 (ALMM) and COR011 (liquidity) to the COR001 (own funds and leverage), COR002 (large exposures) and COR005 (Asset Encumbrance) returns. The reviews also require an assessment of the effectiveness of the systems and controls over regulatory reporting..
The future of ABC
‘To some degree it matters who’s in office, but it matters more how much pressure they’re under from the public’, Noam Chomsky. It could be argued that it is worldwide public outcry that has been the trigger for governments around the globe to sit up, take notice and commit to actions to tackle bribery and corruption.
The 2017/18 business plan has made clear that the FCA intends to shift some of its focus from consumer issues to market structures, incentives and distribution in the GI and Protection sector. Whilst the regulator will continue to monitor and review the issues directly affecting individual and small and medium sized enterprise (SME) consumers, this is a sure sign that it intends to focus more directly on competition issues.
How taxing are the new requirements for firms?
The Criminal Finances Act 2017 has received Royal Assent and will come into force this Autumn. It enshrines into law the new criminal offence for corporations that fail to prevent the facilitation of tax evasion. This is modelled on the ‘failure to prevent bribery’ offence in the Bribery Act 2010.
On Friday (12 May 2017) we saw what may very well be the highest profile “ransomware” attack to date. The impacts for many of the institutions involved will be costly. The impacts for their customers, or users, have ranged from inconvenience to ultimately being life threatening.
This month we are featuring the fifth in a series of MiFID Busters. Each edition will explore a MiFID II theme, setting out the key changes and practical implications for financial institutions. The May MiFID Buster focuses on Costs and Charges.
The LIBOR and FX fixing scandals undermined the reputation of global financial markets. As a direct consequence, UK and European regulators have focused upon corporate governance and culture as a means of improving standards of conduct and restoring trust in financial markets. In addition, the administration of and submission to Benchmarks has become a regulated activity for the first time.
HM Treasury (HMT) released its second consultation.
Both the PRA and Competition and Markets Authority (CMA) are concerned that mortgage lenders operating under the Standardised Approach (SA) for credit risk are being incentivised to specialise in riskier exposures, thereby undermining the safety and soundness of these firms.
David Brain, Partner & Head of Assurance and Michael Knight-Robson, Consultant in the Assurance team, have written an article that is featured in the January – March 2017 issue of Risk & Compliance magazine. The article discusses the new Criminal Finances Bill. The Bill is intended to produce three main outcomes:
Colin Darby, Consultant in Bovill’s Assurance team spoke to Alex Davidson of Thomson Reuters Accelus about the The Financial Action Task Force’s (FATF) new guidance on de-risking and correspondent banking. The FATF findings clock the growing trend of de-risking in the financial sector, fueled by fines and compliance costs, including anti-money laundering and counter-terrorist financing.
The FCA’s recent hefty fine imposed on Bangladeshi bank Sonali’s UK branch for AML breaches acts as a strong warning for senior managers. In cases post the Senior Managers Regime, the FCA will no longer be solely targeting the Money Laundering Reporting Officer (MLRO) but any individual in a senior position with AML responsibilities.
The Financial Conduct Authority has begun requesting Internal Capital Adequacy Assessment Processes (ICAAPs) from the investment business sector. In light of this, investment firms may need to start preparing for an update of their ICAAP documentation. Mark Spiers, Head of Banking, Investments and Lending, talks to Informa Law about the implications of this.
Designed to enhance transparency and engagement during policy renewals, PS16/21 means that come April 2017 GI customers must be greeted by two additions to their renewal notice, namely:
Darcy Tallon, a consultant at Bovill, has featured in the Council of Mortgage Lenders (CML) e-zine magazine, a monthly publication that is circulated to CML members, that explores whether interest only mortgages are a ‘ticking time bomb’.
On 19 July 2016, ESMA published advice on the possible extension of the AIFMD passport to non-EU AIFMs and non-EU AIFs.
New standard for external CASS audit could make EVERYONE’S audits more difficult
On 21 July 2016, the FCA released a thematic review on regulatory issues surrounding UK equity dark pools. The FCA looked at promotional activity and the identification and management of conflicts of interest by dark pool operators. It also reviewed governance, oversight and controls.
Financial crime and Anti-Money Laundering (AML) work will continue to be one of the FCA’s top seven priorities. The publication of the FCA’s AML Annual Report 2015/16 published on 12 July 2016 looks at how the regulator has sought to achieve its objectives over the last year and addresses future plans. A summary of some of the key items covered in the report are outlined below.
Marks Spiers, Head of Banking, Investments and Lending at Bovill, spoke to Damian Fantato at FTAdviser on how financial advisers will still have to meet MiFID II requirements despite the UK’s decision to leave the EU.
As we expected, firms have been given until 3 January 2018 to implement MiFID II after the EU Parliament gave its backing to a one year deferral.
Bovill’s Head of Technical spoke with Thomson Reuters Accelus on the warning from lawyers that some firms are inadequately prepared for the new suspicious transaction and order reports (STOR) requirements. These are due to be implemented under the Market Abuse Regulation (MAR), which is just under seven weeks away.
Human and technological resourcing challenges are exposing wealth managers to serious KYC (know your customer), anti-money laundering and sanctions screening risks, according to new research by WealthBriefing. Our head of Banking, Investments and Lending, Mark Spiers, shared some thoughts on the difficulties some firms can have by either understaffing or overstaffing for compliance .
Bovill’s Michael Knight-Robson discussed some of the challenges and solutions for the increasing concern of cybercrime for Professional Investor magazine’s roundtable feature.
Listen to Bovill’s Colin Darby talking to Rob Young on today’s deadline for 20 UK banks to inform the FCA of any links they may have to Mossack Fonseca.
Bovill’s Colin Darby spoke with Thomson Reuters Accelus on the news that the FCA have written to 20 UK banks and other financial services firms to find out if they are linked to Mossack Fonseca, the law firm involved with the Panama Papers leak.
The Panama Papers leaked from the law firm Mossack Fonseca have reportedly revealed the tricks of the trade for helping clients laundering money, along with avoiding tax and sanctions. We understand over eleven million documents have been released, making it the biggest data leak in history and exposing how lawyers can alter identities to avoid bank anti-money laundering (AML) systems.
Head of Venture Gillian Roche-Saunders provided FT Adviser with some thoughts on the recent proposals in the Financial Advice Market Review (FAMR) and the prospect of a narrower definition of regulated advice. FAMR are hoping to improve access to advice, and this could be of benefit to robo-advisers and non-advised distribution models.
Bovill’s Colin Darby spoke with Thomson Reuters Accelus on the finding of over 900 suspicious customer files plus material on money laundering at Banca Privada d’Andorra (BPA).
The financial crime direction has changed. Although AML should always be fundamental for firms, throughout the series we have highlighted other areas that we believe financial institutions need to pay more attention to going forward. As we wrap up our series, we want to emphasise how important it is that anti-financial crime controls go further than just banks, investment firms and typical financial institutions. Other types of institutions are being targeted by criminals: casinos, estate agents and virtual currency exchange platforms all need to catch up with financial institutions. Let’s take a look at these in turn.