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Article
Publication date: 8 May 2018

Adebola Adeyemi

The purpose of this paper is to highlight the activities of the FCA with respect to the incidence of money laundering and highlight regulatory gaps. The financial services…

Abstract

Purpose

The purpose of this paper is to highlight the activities of the FCA with respect to the incidence of money laundering and highlight regulatory gaps. The financial services sector provides a crucial infrastructure for the promotion of wealth and innovation in the UK. This attractive infrastructure also appeals to criminals looking to launder the gains of their illicit activities.

Design/methodology/approach

The paper analyses the UK money laundering regime, highlighting specific challenging areas. The paper investigates the role of politically exposed persons and the use of corporate structures in promoting money laundering. In this context, it also becomes crucial to investigate the role of financial institutions and the sufficiency of their governance approach in lessening the incidence of money laundering. The paper investigates secondary sources and relies on their findings. It compares these findings to the regulatory outcomes.

Findings

The paper recommends steps that can be used to lessen the incidence of money laundering in the UK. From the reports evaluated, it is clear that the Financial Conduct Authority is working towards reducing the incidence of money laundering, but this could be further strengthened with the adoption of additional enforcement tools.

Practical implications

The paper suggests that different approaches should be used based on firm size, the type of business and the risk that a financial services firm presents to the financial sector. A large firm will need to bear more regulatory burden compared to a smaller firm.

Originality/value

The paper investigates the current approach to minimising the incidence of money laundering in the UK. It suggests that the regulator can guide financial services firms to meet the regulatory objectives by relying on an approach that discerns the regulatory risks presented by different firms depending on their size.

Details

Journal of Money Laundering Control, vol. 21 no. 2
Type: Research Article
ISSN: 1368-5201

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Article
Publication date: 1 January 2014

Gary Wilson and Sarah Wilson

Located within growing scholarly interest in linking the global financial crisis with revelations of financial crime, this piece utilises Roman Tomasic's suggestion that…

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1413

Abstract

Purpose

Located within growing scholarly interest in linking the global financial crisis with revelations of financial crime, this piece utilises Roman Tomasic's suggestion that the financial crisis has marked something of a turning point in regulatory responses to financial crime worldwide. Tomasic attributes this to changing attitudes towards light-touch regulation and risk assessment, and the demand for existing agencies to be replaced with new tougher authorities. In the UK, this can be illustrated by the imminent replacement of the FSA with the Financial Conduct Authority (FCA). The paper aims to discuss these issues.

Design/methodology/approach

Discussion of the FSA's financial crime fighting activity is an important forecast for the likely directional focus of the FCA in this regard. A focus only on “market abuse” enforcement within this arises on account of the effects for financial systems widely attributed to this activity, with threats to systemic stability being a hallmark of the 2007-2008 financial crisis. This methodology also encourages coherence in focus and management of sources within the article. Market abuse enforcement provides a lens for exploring the FSA's adoption of the philosophy and ethos of “credible deterrence”, and FCA commitment to retain it, and ultimately for applying the hypothesis of the “haphazard pursuit of financial crime” to pre-crisis criminal enforcement relating to financial crime undertaken by the FSA.

Findings

The FSA and FCA appear acutely aware that the financial crisis has marked something of a turning point for the enforcement of financial crime, and for signalling changes in approach, for the reasons explored by Tomasic. Tomasic correctly identifies factors encouraging a range of undesirable practices pre-crisis, and ones signalling tougher and more sustained attention being paid to financial crime henceforth. It is noted that, pre-crisis, the FSA's pursuit of criminal enforcement of market abuse was conscious, comprehensively resourced, well publicised, and actually extensive.

Originality/value

This exploration of the FSA's criminal enforcement of market abuse given the Authority's own perceptions that it was not, and could never be, a “mainstream” criminal prosecutor considers the likely lasting legacy of this determined pursuit, when domestic politics and pan-European policies suggested against this. This is likely to be enormously valuable as the FCA undertakes this task in a domestic arena which is markedly in contrast from this, and where European agendas are pushing in favour of criminal enforcement, with the “more Europe, or less” debate providing a further dimension of interest.

Details

Journal of Financial Crime, vol. 21 no. 1
Type: Research Article
ISSN: 1359-0790

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Book part
Publication date: 9 July 2018

Patrick Ring

In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many…

Abstract

In the context of increasing private provision of social security and welfare, alongside what is argued to be the ‘financialisation’ of daily lives, individuals in many countries face an array of potentially difficult financial choices and decisions. Limitations in levels of knowledge and expertise may lead them to consider seeking financial advice. Yet, in the wake of the great financial crisis, trust in the financial services industry is low.

At the same time, in a number of countries the financial advice sector is facing its own challenges. These include regulatory issues concerning the definition, suitability and delivery of advice; the affordability of advice; and the challenges and opportunities facing the advice sector as a result of the increasing use of technology in the financial services sector.

This chapter examines the implications of these developments for the regulation and governance of financial advice in the context of Markets in Financial Instruments Directive II. In particular, it considers the example of the UK and issues this raises for the implementation of recent European regulatory reforms.

Details

Governance and Regulations’ Contemporary Issues
Type: Book
ISBN: 978-1-78743-815-6

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Article
Publication date: 23 June 2021

Sherena Sheng Huang

The UK authority published its first regulatory guidance on crypto-assets in July 2019. This paper aims to critically evaluate the effectiveness of the crypto-asset…

Abstract

Purpose

The UK authority published its first regulatory guidance on crypto-assets in July 2019. This paper aims to critically evaluate the effectiveness of the crypto-asset regulation in the UK and the consistency of the existing regulatory scheme.

Design/methodology/approach

This paper adopts comparative methods to carry out the analysis. The paper begins by elaborating the development of crypto-assets alongside the financial innovation in the world and pinpointing the core Acts and Regulations applied to crypto-assets in the UK. The paper also discusses a court case in the EU to highlight an argument among legal professions concerning crypto-assets classification.

Findings

Through carefully analysing relevant primary and secondary legislation of the UK and EU, this paper identifies some unclarified issues in the regulatory framework and discovers three flaws in the regulatory system. The paper concludes that the effectiveness of the current regulatory scheme is poor and room for improvement exists.

Originality/value

The paper provides the first review and a thorough analysis of the Laws and Acts applied to the crypto-asset regulation in the UK. It also calls on a simpler and clearer regulatory scheme from the perspectives of market participants and consumers. The discovered issues in the crypto-asset regulation in the UK may urge authorities to improve the existing regulatory frameworks and legal provisions.

Details

Journal of Financial Regulation and Compliance, vol. 29 no. 3
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 5 June 2020

Mario Menz

The purpose of this paper is two-fold. First, it highlights areas of disconnect between how the financial services sector in the UK approaches the management of…

Abstract

Purpose

The purpose of this paper is two-fold. First, it highlights areas of disconnect between how the financial services sector in the UK approaches the management of politically exposed persons (PEPs) risk; the requirements of the UK’s laws and regulations in relation to PEPs; and the expectations of the Financial Conduct Authority (FCA) in this regard. It then proposes an alternative approach to the risk-management of PEPs.

Design/methodology/approach

Semi-structured interviews have been carried out among compliance professionals in UK financial services.

Findings

This paper provides rare insight into the anti-money laundering (AML) arrangements of UK banks, an area that has not yet been widely researched in the academic literature. It argues that the expectations of the FCA exceed both the letter and the spirit of the UK’s laws and regulation around AML by emphasising an administrative approach over a qualitative/analytical approach to risk-management. It further suggests that mixed messages disseminated by the FCA have incentivised banks to shift their focus from financial crime risk (i.e. preventing money laundering and terrorist financing, etc.) towards regulatory risk (i.e. the risk of falling foul of regulatory expectations).

Practical implications

The paper makes suggestions for a more relationship-centric approach to PEP risk-management.

Originality/value

It provides unique insight into PEP risk-management in financial services, and argues for the FCA to propagate a more relationship-centric approach to PEP risk-management.

Details

Journal of Financial Crime, vol. 28 no. 4
Type: Research Article
ISSN: 1359-0790

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Article
Publication date: 2 May 2017

Melanie Brody, Ori Lev, Jeffrey P. Taft, Guy Wilkes, Matthew Bisanz, Tori Shinohara and Joy Tsai

To summarize developments by the US Consumer Financial Protection Bureau (“CFPB”), the US Office of the Comptroller of the Currency (“OCC”), and the UK Financial Conduct

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1084

Abstract

Purpose

To summarize developments by the US Consumer Financial Protection Bureau (“CFPB”), the US Office of the Comptroller of the Currency (“OCC”), and the UK Financial Conduct Authority (“FCA”) in their respective efforts to facilitate responsible financial innovation, and to predict what the financial services industry may expect in coming months.

Design/methodology/approach

This article summarizes financial marketplace developments of particular interest to the CFPB based on the CFPB’s report on its initiative to support responsible financial innovation and CFPB Director Richard Cordray’s speech at the Money 20/20 conference. The article also discusses the OCC’s release of a framework for its “Innovation Initiative”, providing insight to how the agency intends to engage with the fintech industry. Finally, this article explains how the FCA has identified the first cohort of firms to participate in its regulatory sandbox to test new financial products and services as part of the FCA’s wider “Project Innovate” initiative.

Findings

Financial technology innovators should closely monitor the agencies’ recent regulatory and policy developments to facilitate responsible financial innovation to be aware of new opportunities and regulatory consequences.

Originality/value

This article provides practical advice for fintech companies and other financial innovators on regulatory and policy updates from experienced financial services lawyers.

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Book part
Publication date: 9 July 2018

Katica Tomic

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs…

Abstract

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs) Regulation for all EU Member States and gives National Competent Authorities (NCAs), European Securities and Markets Authority (ESMA), and European Banking Authority (EBA) powers to monitor financial products (and services) under their supervision and to “temporarily” prohibit or restrict the marketing, distribution, or sale of certain financial instruments, or to intervene in relation to certain financial activities or practice. This extends the supervisory measures defined in MiFID II to any PRIIPs (including insurance-based investment products “IBI products”) that would not otherwise fall under the scope of MiFID II. Product intervention power is given to the NCAs, and in order to use power, it requires to take the specifics of the individual case into account and a series of conditions, criteria, and factors to fulfill. Moreover, ESMA and the EBA have a type of control function and ability to override national regulators on product. The aim of product intervention powers is to ensure strengthening of investor protection, but given the potential significant impact of this power, calls into question of possibility to delay innovation and slow down product developments on the capital market.

This paper provided an overview of supervisory measures on product intervention, that is, scope of the product intervention power, criteria, factors, and risks which have to be taken into consideration when using this regulator’s tool.

Details

Governance and Regulations’ Contemporary Issues
Type: Book
ISBN: 978-1-78743-815-6

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Article
Publication date: 2 July 2018

Mark S. Bergman, John J. Satory and Sofia D. Martos

This paper aims to summarize new disclosure and procedural rules and related guidance for initial public offerings in the UK that will become effective on July 1, 2018.

Abstract

Purpose

This paper aims to summarize new disclosure and procedural rules and related guidance for initial public offerings in the UK that will become effective on July 1, 2018.

Design/methodology/approach

This study summarizes new disclosure and procedural rules and related guidance published by the Financial Conduct Authority intended to improve the quality and timeliness of key information made available to investors in advance of an initial public offering (IPO) in the UK, in particular the timing of the publication of IPO research by connected and unconnected analysts.

Findings

While it remains to be determined whether the new process will provide investors with more time to digest information about the issuer and its business and increase the likelihood that investors will place greater emphasis on the prospectus and less on research reports of connected analysts, at the very least, the publication of the prospectus or a registration document, rather than the intention to float announcement as is currently the case, will provide the first public confirmation that an IPO is imminent.

Originality/value

This study provides practical guidance from experienced securities and financial services lawyers.

Details

Journal of Investment Compliance, vol. 19 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 6 November 2017

Panos Katsambas and Chu Ting Ng

To explore the issues and questions put forward for consideration by stakeholders by the UK Financial Conduct Authority (FCA) in its discussion paper dated February 2017 …

Abstract

Purpose

To explore the issues and questions put forward for consideration by stakeholders by the UK Financial Conduct Authority (FCA) in its discussion paper dated February 2017 – the purpose of which was to gather stakeholders’ views on illiquid assets and open-ended investment funds and seek to provide a basis for debate by setting out several policies for FCA intervention.

Design/methodology/approach

Explains and discusses the potential consequences of each issue and question put forward by the FCA, including definitions of illiquid assets, liquidity management tools, treatment of professional and retail investors, portfolio restrictions and liquidity buffers, valuation of illiquid assets, direct intervention by the FCA, enhanced disclosure, and secondary markets for illiquid assets.

Findings

What was found in the course of the work? The decision to suspend redemptions by these large property funds has brought to the forefront the key question of whether real estate or other illiquid assets are appropriate for open-ended funds. Many questions and considerations remain as to what impact the FCA’s proposed changes could have on the industry. The FCA consultation closed on 8 May 2017 and the results could determine new and adapted rules.

Originality/value

Practical guidance from experienced funds lawyers.

Details

Journal of Investment Compliance, vol. 18 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 21 August 2019

Bradley Rice and Bisola Williams

To review the findings of the Financial Conduct Authority's consumer research on cryptoassets.

Abstract

Purpose

To review the findings of the Financial Conduct Authority's consumer research on cryptoassets.

Design/methodology/approach

Summarises the FCA's research and draws on other recent cryptoasset papers/announcements.

Findings

The research finds consumers do not understand crytpoassets well, and not many of them buy them; those that do see them as a fast track to wealth.

Practical implications

This research will further inform the approach the FCA eventually takes in clarifying the regulatory perimeter for cryptoassets.

Originality/value

Summary by experts in the field.

Details

Journal of Investment Compliance, vol. 20 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

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