by Karolos Seeger, Aisling Cowell, Andrew Lee, and Natasha McCarthy
The Law Commission has published an extensive report examining the UK’s current Suspicious Activity Report (“SAR”) regime for notifying suspected money laundering to the National Crime Agency (“NCA”) and outlining 19 recommendations for reform. These include both legislative and non-legislative mechanisms designed to improve the efficiency and effectiveness of the consent regime. This report follows a July 2018 consultation paper, which was discussed in a previous client update. Interestingly, the Law Commission reviewed a sample of hundreds of SARs to help it analyse the potential impact of the various proposals and lend support to its final recommendations.
In short, the existing SAR regime will be largely retained, with the recommendations having limited practical effect, especially for organisations outside the regulated sector. We summarise below the key recommendations and consider their likely impact. Continue reading
by Karolos Seeger, Andrew Lee, and Natasha McCarthy
The Law Commission has published an extensive consultation paper examining the UK’s current Suspicious Activity Report (“SAR”) regime for reporting suspected money laundering to the National Crime Agency (“NCA”) and outlining provisional reform proposals. The consultation runs until 5 October 2018, after which the Law Commission will present its final recommendations to the Government. This is the first step in a process that could result in significant changes to Part 7 of the Proceeds of Crime Act 2002 (“POCA”), affecting all organisations that deal with money laundering issues.
We summarise below the key views expressed and changes proposed in the consultation paper, and analyse the likely practical effect if the reforms are implemented. Continue reading
by Karolos Seeger, Simon Witney, and Andrew Lee
Following the consultation papers published in July and December 2017, the UK Financial Conduct Authority (“FCA”) on 4 July 2018 provided responses to the industry feedback it received and issued near-final rules on extending the Senior Managers and Certification Regime (“SMCR”) to almost all FCA-regulated firms. Notably, the FCA has confirmed that the new rules will apply from 9 December 2019. We summarise below the limited changes from the FCA’s initial SMCR proposals, the main features of which have been covered in our previous client updates.
In addition, the FCA has published a consultation paper regarding the introduction of a new directory of financial services workers (the “Directory”). This will be available from 10 December 2019 for banks, building societies, credit unions and insurers, and from 9 December 2020 for all other firms. The key aspects of the Directory and firms’ significant related notification obligations are outlined below. Continue reading
by Karolos Seeger, Andrew Lee, and Robin Lööf
In R (AL) v Serious Fraud Office, the English High Court considered the SFO’s obligations to individuals prosecuted following the deferred prosecution agreement (“DPA”) in July 2016 with a company anonymised as “XYZ Ltd”. The Court’s decision is likely to force the SFO to adopt a much more aggressive approach in relation to company counsel’s notes of interviews conducted during a company’s internal investigation. In particular, when those interview notes are potentially relevant to the defences of individuals being prosecuted, this judgment is likely to lead to the SFO putting further pressure on companies to produce the notes, through court proceedings if necessary. We analyse these and other issues covered by the judgment below. Continue reading
by Karolos Seeger, Patricia Volhard, Simon Witney, and Andrew Lee
On 13 December 2017, the UK Financial Conduct Authority (“FCA”) issued three new consultation papers providing further details on its extension of the Senior Managers and Certification Regime (“SMCR”) to almost all firms regulated by the FCA. Some of the FCA’s key proposals are summarised below. We have previously published a client update outlining the main features of the extended SMCR. Continue reading
by Karolos Seeger, Andrew Lee, and Simon Witney
On 26 July 2017, the UK Financial Conduct Authority (“FCA”) issued its first consultation paper on extending the Senior Managers and Certification Regime (“SMCR”) to almost all of the approximately 50,000 firms regulated by the FCA. The SMCR represents an important pillar of the FCA’s continuing efforts to promote individual responsibility and improve senior management accountability across the entire UK financial services industry. It will replace the current Approved Persons Regime.
The FCA has requested responses to the consultation paper by 3 November 2017, and there will be further consultation papers on particular aspects of the SMCR. It is anticipated that final rules will be published in the summer of 2018, and firms should expect to have to implement these by the end of next year. The SMCR has three main components: the Senior Managers Regime, the Certification Regime and the Conduct Rules. The key features of each are summarized below. Continue reading
by Karolos Seeger, Alex Parker, Ceri Chave, and Andrew Lee
On 26 June 2017, the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 came into force. These new regulations (the “2017 Regulations”):
- require a written assessment of money laundering risk and prescribe some features of effective internal controls;
- detail when different categories of customer due diligence must be conducted and what steps must be taken; and
- specify beneficial ownership information that trusts must provide for inclusion on a central register.
The 2017 Regulations are intended to ensure that the UK’s anti-money laundering regime is in line with the Financial Action Task Force’s standards and to implement into UK law the European Union’s Fourth Money Laundering Directive (“MLD 4”). The key features of the 2017 Regulations and the principal differences between them and the Money Laundering Regulations 2007 (the “2007 Regulations”) are summarised below. Continue reading
by Karolos Seeger, Alex Parker, Andrew Lee, Ceri Chave, and Ed Pearson
On 27 April 2017, the Criminal Finances Act 2017 (the “Act”) received Royal Assent. The Act has not yet come into force, but it is expected that this will take place by September 2017. It includes several provisions that will significantly affect the investigation and enforcement of corporate crime in the United Kingdom. The key features of the Act are: Continue reading
by Karolos Seeger and Andrew Lee
On 1 February 2017, the UK’s financial regulators, the Financial Conduct Authority (“FCA”) and the Prudential Regulation Authority (“PRA”), published a policy statement outlining a number of reforms which are intended to improve the transparency, fairness and speed of their enforcement decision-making procedures. This follows a consultation paper in April 2016 setting out how the regulators proposed to implement HM Treasury’s recommendations from a review in 2014 and Andrew Green QC’s 2015 report into enforcement actions after the collapse of HBOS. Many of the changes only apply to the FCA’s enforcement process; the PRA will publish a guide to its enforcement process later this year. The substantive amendments affect only guidance issued by the FCA (the Enforcement Guide and the Decision Procedure and Penalties Policy), not binding FCA rules. The policy statement also indicates that there will be further consultation papers in relation to the Enforcement Guide and the FCA’s penalties policy. In general, the reforms relating to settlements and references to the Upper Tribunal will come into effect on 1 March 2017, while the remaining reforms are effective immediately. The key changes are summarized below. Continue reading
by Karolos Seeger, Alex Parker and Andrew Lee
In a judgment last week, the English High Court ruled that notes, transcripts and records of interviews prepared by lawyers during an internal investigation are not covered by legal advice privilege. While the decision may be appealed (RBS has indicated that it intends to seek permission to appeal), it potentially has important implications for companies and their lawyers when internal interviews and investigations are being conducted, even when external counsel are retained. Continue reading