A relatively quiet week for the FCA nonetheless saw a major speech from CEO Nikhil Rathi on the regulatory approach to big tech and AI.
Enforcement
A fine of £2,452,700 ($3,209,713) has been levied on Bastion Capital London Limited after the firm was found to have failed to manage the risk of being used to facilitate fraud and money-laundering.
The fine relates to £71.5bn ($93.5bn) in Danish and Belgian equities that were traded between January 2014 and September 2015. According to the FCA, “trading appears to have been carried out to allow the arranging of withholding tax reclaims in Denmark and Belgium”.
The case is the fifth cum-ex trading action brought by the FCA since May 2021.
Financial Services and Markets Act 2000 S206
Two company directors have been sentenced to 5.5 years and 2.5 years in prison following successful prosecution by the FCA for fraud and money-laundering.
Andrew and Peter Currie were directors of a peer-to-peer investment platform called Collateral. The platform was advertised as being FCA approved, but Peter Currie had swapped the details of another company he had agreed to sell for those of Collateral on the FCA’s public register.
The Curries were warned to cease unauthorised business in January 2018, but the platform continued to receive investments, and £750,000 ($981,000) was removed from client accounts. The two directors also appointed an administrator without informing the FCA, and transferred further funds out of the company accounts.
A new administrator was appointed by the FCA, and estimated that £11m ($14.4m) of the £17.9m ($23.42m) in customer loans outstanding will never be recovered. In his sentencing remarks, his Honour Judge Griffith said: “Collateral was bult on foundations of sand and dishonesty”.
Proceeds of Crime Act s327
Speeches and media
There was a brief welcome for the proposals outlined by Chancellor Jeremy Hunt in his Mansion House speech. Those proposals included plans to direct £50bn ($65.43bn) from direct contribution pension funds into high-growth companies, and a series of reforms to capital markets.
The FCA also referenced Rachel Kent’s Investment Research Review as it pledged to continue consulting on the best way to ensure capital markets had high standards and dynamism.
CEO Nikhil Rathi outlined the FCA’s thinking on regulating big tech and AI at a conference organised by The Economist.
An update on the FCA’s work to crack down on unregistered crypto ATMs was issued, with a further 26 illegal machines now closed since the start of the year.
Changes to MCOB to allow firms to comply with the Government’s mortgage charter were announced. The changes delay repossessions by at least a year from the first missed payment and also include a deal whereby lenders agree to vary mortgage contracts by allowing borrowers who are up to date with their payments to:
- eliminate capital repayments for up to six months;
- extend their mortgage term to reduce their monthly payments and revert to the original term within 6 months.
The FCA expects lenders to have introduced an approach fully compliant with the charter by the end of January 2024.
MCOB 7.6.28R
MCOB 11.6.3(3)a
MCOB 11.6.3(3)b