Financial Conduct Authority  

FCA has 'large number' of investigations in pipeline

FCA has 'large number' of investigations in pipeline

The Financial Conduct Authority has a "large number" of investigations in its pipeline, its director of enforcement and market oversight has said. 

Speaking at the Global Investigations Review Live event in London today (April 4) Mark Steward said some of the investigations were entering "important phases" and tackling "very serious" issues.

These included suspected financial crime, false or misleading statements and "significant" anti-money laundering system and control issues.  

The regulator now conducts "dual track" anti-money laundering investigations, where suspected breaches of the regulations might lead to either criminal or civil proceedings.

Mr Steward said this practice has brought anti-money laundering investigations in line with the FCA’s approach to market abuse investigations, which have been conducted on a "dual track" basis for many years. 

But Mr Steward said criminal investigations as a result of a firm's poor anti-money laundering systems and controls would likely be "exceptional".

He said: "This does not mean every investigation where we think there is a case to answer will or should be prosecuted in this way.

"I suspect criminal prosecutions, as opposed to civil or regulatory action, will be exceptional.

"However, we need to enliven the jurisdiction if we want to ensure it is not a white elephant and that is what we intend to do where we find strong evidence of egregiously poor systems and controls and what looks like actual money-laundering."

Mr Steward also reflected on the regulator's recent investigations, including the multi-million pound fines imposed on Santander, Goldman Sachs and UBS, saying they had highlighted recurring issues within firms.

He said in all cases the FCA found senior management was either invisible or lacking influence because they were not aware of the problem, or management data was insufficient to alert them to the persistent problem.

He said the cases showed firms will need to assess managers' control of the business to ensure they comply with the obligation under the senior management and certification regime to take ‘reasonable steps’ to prevent rule breaches.

The regime will be rolled out to advisers later this year.

Mr Steward also warned firms will be held accountable for foreseeable harm and the FCA found what had happened in a lot of cases should have been foreseeable.

In December 2018, the FCA fined Santander £32,817,800 for failing to effectively process the accounts and investments of deceased customers.

Last month the FCA fined UBS £27,599,000 for transaction reporting failings that occurred over a nine-year period and Goldman Sachs £34.3m for similar failings over a ten-year period. 

The regulator's rules on transaction reporting were based on the EU's Mifid directive from 2007 to 2018, with the implementation of Mifid II in January 2018 extending requirements to include additional rules.

A transaction report is data submitted to the FCA that relates to a financial market transaction and includes details of the product traded, the firm that undertook the trade, the trade counterparty, the client, and elements such as price, quantity and venue.