FCA fast-growing firms review published
During 2021-22 the Financial Conduct Authority (FCA) conducted a multi-firm review of 25 fast-growing firms to better understand the risk of harm from them, identify the root causes of those harms and prompt action to address those risks of harm where appropriate. The FCA found that most firms did not update their risk management frameworks, resulting in an inadequate assessment of risks and the potential for harm. Some firms did not have capital and/or liquid assets commensurate with their size, complexity and growth in business.
Better SARs advice from UK FIU
The UK’s Financial Intelligence Unit, The National Crime Agency has published Guidance on submitting better quality Suspicious Activity Reports for UK regulated firms. The document covers the essentials of SAR reporting including how to submit a SAR; the basic structure of an SAR and obtaining a defence against money laundering or terrorist financing.
Fed Vice Chair for Supervision on crypto
Michael S Barr, in a speech at the Peterson Institute for International Economics, Washington, laid out some of the risks of crypto, noting: “in the absence of regulatory compliance, customers don’t have the information they need to assess and mitigate their risks. Investors do not have the structural protections they have relied on for many decades.” Whilst indicating the complicated framework of regulatory supervision in the US, he also said banks should take a careful and cautious approach to engaging in crypto-asset related activities and the crypto sector. Barr alsso summarised the Fed’s recent actions including its supervisory guidance letter from August 2022 and additional clarity about supervisory expectations through another statement issued jointly with other bank regulatory agencies in February.
US Treasury, Federal Reserve, and FDIC act on strengthening confidence in banking system
Following the latest concerns regarding Silicon Valley Bank (SVB), the joint press release announces that all SVB customers will have their deposits fully protected. The release says a similar scheme will be put in place for customers of Signature Bank in New York, which has also been closed by its state chartering authority.
ANZ fined AUS$10m in consumer protection breach
ANZ has been fined $10 million by the Australian Federal Court because of failinlgs in its Home Loan Introducer Program (Introducer Program).
The Introducer Program involved home loan referrals to ANZ from third party ‘introducers’ from various professions, including cleaners and real estate agents.
ASIC Deputy Chair Sarah Court said, ‘Under consumer protection laws, ANZ’s Introducer Program should have only accepted names and contact details for customers from unlicenced third parties. Instead, ANZ was sent sensitive information by unlicensed intermediaries, including pay slips and copies of identification documents. In some cases, these documents were fraudulent.’
‘By failing to have robust compliance and training processes in place, ANZ made it possible for third party intermediaries to misrepresent consumers’ financial details in order to receive commissions on loans approved based on possibly misleading information,’ concluded Ms Court.
ANZ admitted the contraventions and has agreed to conduct a review of its policies and procedures around its Introducer Program to ensure ongoing compliance with credit legislation.
SEC final judgment in fraud case
In June 2022, the SEC alleged that Bradley Moynes, President, CEO and Director of two small and thinly traded companies, Formcap Corporation and Digatrade, generated demand for the stock they controlled by paying promoters to tout the stock and then secretly sold stock into that demand, generating more than $1.5 million in unlawful stock sale proceeds from unsuspecting investors.
Final judgements state that the defendants have been ordered to pay over $3.4 million in disgorgement of ill-gotten gains, prejudgment interest, and civil penalties.
Rachel Kent to chair Edinburgh Reforms
Andrew Griffith MP, Economic Secretary, has confirmed Hogan Lovells Partner Rachel Kent will lead the investment research review announced in December 2022. Elsewhere in his speech Griffith referenced forthcoming changes to the UK’s prospectus regime, with plans to: “completely overhaul[ing] the UK’s Prospectus Regime to widen participation in capital markets, improve the efficiency of fundraising for companies and improve the quality of information investors receive. We will do this by repealing the existing Prospectus Regulation and replacing it with a new regime tailored to the UK. Our new regime will be simpler, more agile, and more effective, and we have already published draft legislation to do that.”
FCA authorises first long-term asset fund
The LTAF is a new category of open-ended authorised fund designed to invest efficiently in long-term assets. The FCA enabled the innovation by creating a new regulatory regime which came into force in October 2021.
The FCA is currently inviting views on ideas about how to further improve asset management regulation with a more modern and tailored regime, to make sure the regime takes account of developments in technology and supports innovation.
A selected summary of key developments for regulated financial institutions
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