Tag Archives: Karolos Seeger

UK Financial Conduct Authority Puts Heads of Legal Outside the Senior Managers Regime

by Karolos Seeger and  Andrew H.W. Lee

In a long-awaited but widely-expected development, the UK Financial Conduct Authority (“FCA”) has issued a new consultation paper[1] proposing that Heads of Legal do not need to be designated as Senior Managers under the Senior Managers Regime (“SMR”). Ever since the introduction of SMR in 2016, the FCA has delayed formally confirming whether heads of legal should be allocated the SMF18 role (Other Overall Responsibility Function).

The FCA came to its position in light of the potential difficulties created by legal professional privilege. A fundamental principle of the SMR is that if a firm breaches a FCA requirement, the Senior Manager responsible for that area can be held accountable if they did not take reasonable steps to prevent the breach from occurring (the so-called ‘Duty of Responsibility’). This could lead to a conflict of interest in which a Head of Legal wishes the firm to waive privilege to help him or her avoid personal liability, while being professionally obliged to advise the firm not to waive privilege where this is not otherwise beneficial for the firm. The FCA also explained that privilege would often restrict it from exercising its usual supervisory processes regarding Senior Managers to obtain documents and information from Heads of Legal, leaving little benefit in requiring them to be Senior Managers. Continue reading →

UK Law Commission Proposes Reforms to Suspicious Activity Reports for Money Laundering

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.[1] 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 →

UK Financial Conduct Authority Issues Near-Final Rules on Extension of Senior Managers and Certification Regime and Introduces New Financial Services Directory

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.[1] 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.[2]

In addition, the FCA has published a consultation paper regarding the introduction of a new directory of financial services workers (the “Directory”).[3] 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 →

English High Court Considers Status of Internal Investigation Interview Notes

by Karolos Seeger, Andrew Lee, and Robin Lööf

In R (AL) v Serious Fraud Office,[1] 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 →

First French DPAs for Corruption Offences

by Antoine Kirry, Karolos Seeger, Alex Parker, Alexandre Bisch, and Robin Lööf

On March 5, 2018, French prosecutors published two Judicial Conventions of Public Interest (“CJIPs” or “French DPAs”) approved by the President of the High Court of Nanterre on February 23. The CJIPs, entered into between prosecutors and two sub-contractors to state-owned utility EDF, SAS Kaefer Wanner (“KW”) and SAS SET Environnement (“SET”), allege that these companies had ceded to solicitations to pay bribes to an EDF procurement manager, and that this behaviour amounted to corruption by them of an individual charged with a public service. KW and SET admitted these facts and their legal qualification[1], and agreed to pay financial penalties of €2,710,000 and €800,000 respectively and compensation to EDF of €30,000 each. In addition, they agreed to submit to monitoring by the French Anti-corruption Agency (“AFA”) for, respectively, 18 and 24 months.

The KW and SET CJIPs are the first to be concluded in respect of corruption offences. Helpfully, they provide (1) detail on the financial incentive of entering into a French DPA for companies with potential exposure for corruption-related offences in France, (2) clarification that co-operation and remediation can significantly reduce the financial penalty, as well as (3) the first examples of monitorships to be supervised by the AFA. However, the crucial question of how a company can qualify for a French DPA remains largely unanswered. Continue reading →

UK Financial Conduct Authority Publishes Details on Extension of Senior Managers and Certification Regime

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[1] 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.[2] Continue reading →

UK Financial Conduct Authority Outlines Extension of Senior Managers and Certification Regime to All Regulated Firms

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.[1] 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 →

UK Implements New Anti-Money Laundering Rules

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[1] 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”).[2] The key features of the 2017 Regulations and the principal differences between them and the Money Laundering Regulations 2007[3] (the “2007 Regulations”) are summarised below. Continue reading →

UK Criminal Finances Act 2017

by Karolos Seeger, Alex Parker, Andrew Lee, Ceri Chave, and Ed Pearson

Overview

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 →

UK’s Financial Conduct Authority and Prudential Regulation Authority Announce Changes to Enforcement Processes

by Karolos Seeger and Andrew Lee

Overview

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 →