UK SARs guidance published
The UK Financial Intelligence Unit (UKFIU), part of the National Crime Agency’s National Economic Crime Centre (NECC), has published a helpful SARs Reporter Booklet aimed at:
- sharing perspectives on the use of SARs with regime participants
- sharing and encouraging best practice amongst reporters
- providing a feedback mechanism to the UKFIU about the operation of the regime.
The booklet includes a number of case studies in different sectors and updates on the latest SARs codes for the UK.
Thematic review feedback for life insurers
The PRA has published feedback on its thematic review of funded reinsurance arrangements in the UK life insurance sector.
The letter identifies a number of risks for UK life insurers to be mindful of and highlights the main thematic findings around sub-optimal collateral portfolios and resource sufficiency. The letter adds “we would ask you to consider the findings of this letter in relation to your business and take the appropriate remedial actions. This should also include continued compliance with the PRA supervisory statement (SS) SS1/20 – Solvency II: Prudent Person Principle, considering potential concentration to single counterparties or common risk factors across counterparties”.
EIOPA publishes annual report
The European Insurance and Occupational Pensions Authority (EIOPA) has published its Annual Report 2022, setting out its activities and achievements of the past year.
The report focuses on the following areas:
- Integrating sustainable finance considerations across all areas of work.
- Supporting the market and supervisory community through digital transformation.
- Enhancing the quality and effectiveness of supervision.
- Ensuring technically sound prudential and conduct of business policy.
- Identifying, assessing, monitoring and reporting on risks to the financial stability and conduct of business and promoting preventative policies and mitigating actions.
- Ensuring good governance, agile organisation, cost-effective resource management and a strong corporate culture.
FINRA June fines summary
FINRA has published its latest disciplinary summary for June 2023 covering a range of enforcement actions. Amongst those mentioned for violations are Goldman Sachs; RBC Capital Markets and Barclays Capital.
OCC risk report published
The Office of the Comptroller of the Currency (OCC) has published its latest semi-annual risk perspective which addresses key issues facing banks, focusing on those that pose threats to the safety and soundness of banks, their ability to provide fair access and fair treatment to customers, and their compliance with applicable laws and regulations. The latest report focuses on five areas:
- the operating environment,
- bank performance,
- special topics in emerging risks,
- trends in key risks, and
- supervisory actions.
The report reflects data as of December 31, 2022.
The key takeaways of the report are that the federal banking system is considered strong overall, as the OCC has closely monitored and supervised the institutions during recent market stress. The OCC has worked directly with banks to ensure proper risk management and restore confidence in the banking system. It notes that some banks have increased their cash holdings and borrowing capacity to handle potential depositor withdrawals, which improves resilience but may affect bank earnings. The banking system experienced heightened volatility due to a liquidity crisis in the first quarter of 2023, and banks are now focused on stabilising liquidity and maintaining confidence.
The report notes it remains important for banks to stay diligent and verify the effectiveness of their risk management practices to withstand present and future economic and financial challenges.
$24 million fine for FOREX fraud
A US District Court has issued a default judgment and permanent injunction against Kay Yang and her companies, AK Equity Group LLC and Xapphire LLC, in a case brought by the Commodity Futures Trading Commission (CFTC). The court found them guilty of fraud in relation to retail foreign currency (forex) transactions targeted at the local Hmong community.
Under the order, Yang, AK Equity, and Xapphire are required to pay nearly $14 million in restitution to defrauded victims and a civil monetary penalty of $10 million. Yang’s husband, Chao Yang, is also required to pay $1.5 million in disgorgement. In addition, the order permanently prohibits Yang, AK Equity, and Xapphire from engaging in activities that violate the Commodity Exchange Act (CEA), registering with the CFTC, or trading in CFTC-regulated markets.
The court found Yang and her companies liable for fraud in relation to retail forex transactions, fraud as a commodity pool operator (CPO) and associated person of a CPO, and registration violations. It also determined that Chao Yang received $1.4 million derived from the fraud.
Guidance for banks to help prevent elderly client fraud
The American Bankers Association Foundation and the Federal Bureau of Investigation has published a new guide with advice to help bank employees detect and prevent elder financial exploitation. The guide provides an overview of financial exploitation and the detrimental impact it has on the elderly and the economy. It also provides guidance on red flags banks should be wary of and the steps to follow should suspicions be raised.
CoinEx required to stop operating in the US, pay penalties, and refund investors
New York Attorney General Letitia James has successfully resolved a legal case against COINEX (CoinEx), resulting in the recovery of more than $1.7 million. CoinEx was found to have violated regulations by operating as a securities and commodities broker-dealer without proper registration, while also falsely presenting itself as a cryptocurrency exchange. To rectify these violations, CoinEx has been ordered to refund more than $1.1 million to numerous investors in New York and pay additional penalties of more than $600,000 to the state.
CoinEx is now prohibited from engaging in the offering, selling, or purchasing of securities and commodities within New York. Furthermore, the platform is not allowed to make its services available to residents of the state. In response to the lawsuit, CoinEx publicly announced its decision to withdraw its platform and services from the United States.
Attorney General James has been actively involved in enhancing oversight and regulation of cryptocurrency companies to safeguard the interests of investors in New York. To date, she has recovered in excess of $500 million from the cryptocurrency industry.
Attorney General James reemphasised the risks associated with unregistered crypto platforms, noting the potential harm they pose to investors, consumers, and the overall economy. The agreement reached with CoinEx serves as a clear warning to other crypto companies that there are significant consequences for disregarding New York’s laws. The Attorney General’s office remains committed to cracking down on such companies that flout the law, mislead investors, and put New Yorkers at risk.
A selected summary of key developments for regulated financial institutions
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