FCA Business Plan 2018/2019

The Financial Conduct Authority (FCA) has published its Business Plan and Thematic Review for 2018/2019.  In this year's Business Plan, the FCA states its priorities to be:

  • Firms’ culture and governance, which should drive behaviours and produce outcomes likely to benefit consumers and markets.
  • High-cost credit, building on the significant impact already made in the market.
  • Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
  • Data security, resilience and outsourcing, since technology plays a pivotal role in delivering financial products and services.
  • Innovation, big data, technology and competition which are driving change in markets.
  • The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers.
  • Long-term savings, pensions and intergenerational differences, reflecting the changing UK population and their financial needs.

In the context of the FCA's priority of tackling financial crime, the FCA will be undertaking work on money laundering and terrorist financing risks in the e-money sector and will share its findings in Q2 2018/2019. The FCA also comments on the role of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) as well as the soon to be established National Economic Crime Centre. To read the full Business Plan please click here


Economic crime inquiry launched by Treasury Committee  The Treasury Committee has launched an economic crime inquirywhich will have the following two strands:

  1. Anti-money laundering and the sanctions regime: The focus of this strand will be on the scale of money laundering, terrorist financing and sanctions in the UK, the current regulatory and legislative landscape, and how individuals, firms and the wider economy have been impacted by these regimes and the implementation of them. 
  2. Consumers and economic crime: The Committee will scrutinise the scale and nature of economic crime faced by consumers, the effectiveness of financial institutions in combatting economic crime and the security of consumers' data.

The deadline for submitting written evidence to the inquiry is Tuesday 8 May 2018. 


Transparency International publishes CPI 2017

In late February, Transparency International (TI) published the 2017 Corruption Perceptions Index (CPI). This is the 23rd annual edition of the CPI, which ranks countries according to the levels of public sector corruption, as perceived by business people and country experts. The CPI ranking aggregates data from a number of different sources, including various polls by institutions such as the World Bank and World Economic Forum. Countries and territories are given a score between 0 and 100, with 0 being highly corrupt and 100 being very clean, and ranked from cleanest to most corrupt. 

These scores and rankings provide businesses with a useful indicative measure of corruption risk associated with the various jurisdictions in which they operate, and identify locations which may require enhanced controls. To read our full briefing on some of the findings and implications for businesses, please click here.


The cyber threat to UK business 2017-2018 report

The Cyber Threat to UK Business Industry 2017-18 report was written in collaboration with the National Crime Agency (NCA) and highlights "the enormous scale" of several serious cyber-hacks, such as the 2013 Yahoo breach, 2016 Uber breach and 2017 Equifax breach, as demonstrations of how large a threat cybercrime is to businesses. The report identifies several key factors which contribute to the growing cyber-threat and highlights ransomware, fake news, data breaches and weaknesses in the supply chain as key threats to UK businesses. It also identifies "crypto-jacking", theft from cloud storage and the "internet of things" as emerging threats. Please click here to read the full report. 


UK Government commits funding to tackle cybercrime

Speaking at the CYBERUK Conference on 11 April 2018, Amber Rudd, former Home Secretary, announced that over £5 million will be used to support the police to establish dedicated cybercrime units to investigate and pursue cyber criminals at a regional and local level. She also announced that the fund would be used to develop a new national training programme for police and the wider criminal justice system, sponsored by the National Police Chiefs Council.

A further £3 million of funding for 2018/2019 will be invested in the Cyber Aware campaign, a cross-government initiative intended to educate the public and businesses with the latest advice on how to protect themselves from cybercrime.

On 12 April 2018, the conference focussed on the government's leadership for business and public sector decision-makers and strategists. Key senior staff, policy makers, CEOs and thought leaders discussed the development of the latest thinking on how cyber security and business acumen can come together to deliver successful business outcomes.

SFO to make changes to expert witness preparation  ​In R v Pabon [2018] EWCA Crim 420, the Court of Appeal dismissed an appeal by an appellant against his conviction for LIBOR rigging. In a letter addressed to the Chair of the Justice Select Committee, the Director of the Serious Fraud Office (SFO) confirmed that the appeal raised questions about the SFO's processes for instructing expert witnesses, and that the SFO had taken the opportunity to review relevant processes.  As a result, the following modifications by the SFO are planned: 
  • Frontloading certain due diligence checks prior to formal evaluation of prospective expert witnesses.  
  • Requiring such individuals to confirm their understanding of their legal duties and disclosure obligations at an early stage.
  • Ensuring consistency of approach to formal evaluation by scoring prospective expert witnesses against standardised criteria (together with other case specific requirements) to assess their suitability and expertise.
  • Enhanced conflict checks on the preferred candidate prior to engagement.
  • Requiring the preferred candidate to reconfirm their understanding of their legal duties and disclosure obligations at the time of instruction and, once instructed, to reconfirm this understanding again prior to giving evidence.
  • Developing an internal training package to raise awareness and further embed the revised processes.

SFO announces enhanced artificial intelligence document analysis capability  The SFO has announced that, following a successful pilot, artificial intelligence (AI) will be used to analyse case documents in all new casework from April 2018. A pilot "robot" was used by the SFO to scan for legally privileged content in the SFO's Rolls-Royce case at speeds that were 2,000 times faster than a human lawyer. The AI technology is said to recognise patterns, group information by subject, organise timelines, and remove duplicates, and would eventually be able to sift for relevancy and remove documents unrelated to an investigation.


SFO to recover £4.4 million from Chad oil corruption case  In a case where a Canadian energy company allegedly bribed Chadian diplomats in North America in return for oil contracts, following a High Court ruling in civil recovery proceedings, the SFO has announced it will be recovering £4.4 million from the company. Griffiths Energy, which changed its name to Caracal Energy Inc. in 2013, pleaded guilty to corruption charges brought by Canadian authorities in the same year. An element of the corruption was the issuance of shares in Griffiths to the wife of a Chadian public official. When Griffiths was subsequently acquired in 2014, the proceeds of the sale of the shares came in to UK jurisdiction and were frozen with the stock transfer agent.  The SFO was then able to begin civil recovery proceedings. The funds are to be invested in projects to benefit Chad by the Department for International Development.


Counter Fraud Unit catches 80 fraudsters and saves £30 million in 2017

The Dedicated Card and Payment Crime Unit (DCPCU), a specialist police unit which tackles the organised criminal groups responsible for financial fraud and crime has announced it has made 136 arrests and prevented fraud worth almost £30 million in 2017. It has also secured 89 convictions in 2017, a 14 percent increase from its 78 convictions in the previous year. The DCPCU has also revealed it recovered over 21,000 compromised card numbers. Since it was established in April 2002, the DCPCU has achieved an estimated £516 million in savings from reduced fraud activity.


UK Finance: Annual fraud update 2017  UK Finance has published a report providing its 2017 annual fraud update on payment cards, remote banking, cheque and authorised push payment scams. The latest data in the report shows that banks and card companies prevented £1,458.6 million in unauthorised financial fraud last year, equivalent to stopping £2 in every £3 of attempted unauthorised fraud. In 2017, losses due to unauthorised financial fraud on payment cards, remote banking and cheques fell by 5 per cent to £731.8 million. Also, for the first time, annual data on losses due to authorised push payment scams (also known as APP or authorised bank transfer scams) has also been collated. A total of £236 million was lost through such scams in 2017. 


Codes of practice on POCA 2002 search powers published

The Home Office has published guidance following amendments to the Proceeds of Crime Act 2002 (POCA 2002) by the Criminal Finances Act 2017. The guidance takes the form of new codes of practice concerning the appropriate and proportionate use of POCA 2002 powers. The codes of practice came into force on 16 April 2018.

The codes cover the exercise of search powers to recover cash and the exercise of search powers to recover listed assets (precious stones and metals, watches, artistic works, vouchers and postage stamps).


EU proposes whistleblower protection legislation

The European Commission has published a proposal for a Directive on the protection of persons reporting breaches of Union law. The proposal aims to strengthen whistleblower protection by setting minimum EU-wide standards and protecting whistleblowing genuinely intended to safeguard the public interest. The proposals include safeguards to discourage malicious or abusive reports and prevent unjustified reputational damage. They will ensure protection for whistleblowers who identify breaches of EU legislation in the fields of: public procurement; financial services, money laundering and terrorist financing; product safety; transport safety; environmental protection; nuclear safety; food and feed safety, animal health and welfare; public health; consumer protection; privacy, data protection and security of network and information systems.


EU Council adopts directive on combating fraud and counterfeiting of non-cash means of payments  The Council of the European Union has adopted a proposed directivewhich aims to combat fraud and counterfeiting of non-cash means of payment such as electronic wallets, mobile payments, and virtual currencies. The directive includes provisions on: expanding the scope of existing offences to include, for example, transactions through virtual currencies; harmonising the definitions of some online crime offences, such as hacking a victim's computer or phishing; introducing rules on the level of penalties, in particular a minimum level for the highest penalties imposed on natural persons; clarifying jurisdicitional scope of relevant offences to ensure cross border frauds are better dealt with; improving EU-wide criminal justice cooperation; and improving prevention and awareness-raising to reduce the risk of becoming a victim of fraud.


European Commission proposal for access to electronic evidence held outside of the EU

The European Commission has published a proposal for a draft Regulation and Directive to make it easier for law enforcement and judicial authorities to obtain electronic evidence located on the cloud when conducting investigations into suspected criminals and terrorists. The Commission notes that the current process of obtaining cross-border data requires judicial cooperation and mutual legal assistance and is much too slow.  

The proposals presented contribute to the Commission's efforts to deliver on the commitment made under the Joint Declaration on the EU legislative priorities for 2018-2019, to better protect European citizens.  The proposals will:

  • include strong safeguards and remedies, including uniting the measures to what is necessary and proportionate and allowing service providers to seek clarification/oppose enforcement; 
  • create binding European Production and Preservation Orders which can be issued to seek production or preservation of data stored by a service provider in another jurisdiction;
  • oblige service providers to designate a legal representative in the Union; and
  • provide legal certainty for businesses and service providers. 

European Parliament: In-depth analysis of money-laundering cases  The European Parliament has published an in-depth analysis of recent money-laundering cases from an EU banking supervisory perspective. The briefing analyses breaches or alleged breaches of anti-money laundering (AML) rules by single supervisory mechanism (SSM) supervised banks and identifies two indicators that may pont to potential money laundering problems: high ownership concentration, and a substantial deposit base from non-resident clients. The briefing also outlines the roles of European and national authorities in applying AML legislation that has further been specified in the 5th Anti-Money Laundering Directive adopted on 19 April 2018. To read the full briefing, please click here


EU extends sanctions on Myanmar

The EU announced on 26 April that it was extending its sanctions against Myanmar. An amending Regulation was published on 27 April. The new measures:

  • extend the existing arms embargo for one year;
  • prohibit the export of dual-use goods for use by the military and border guard police; and
  • impose restrictions on the export of equipment for monitoring communications which might be used for internal repression. 

The Regulation also includes asset freezing provisions, providing for the imposition of targeted financial sanctions against individuals from the Myanmar Armed Forces (Tatmadaw) and border guard police where those individuals are responsible for serious human rights violations, obstructing the provision of humanitarian assistance or obstructing the conduct of independent investigations into human rights abuses (together with natural or legal persons associated with such individuals). No targets have been designated to date under these asset freezing powers.